SGLI, FSGLI, VGLI Conversion for Maryland Veterans

SGLI-VGLI Eligibility

In 2023 Life insurance coverage limit available per servicemember was increased to $500,000/00 from $400,000/00. This coverage is available to all members of the armed forces while serving on active duty. All service members have the ability to reject, accept, or alter their SGLI coverage throughout the course of their service. Those that choose to tough it out to that golden 20 year retirement or are separated due to disability, actually have a chance to keep that coverage upon retiring because they meet one of the following;

• Had SGLI while you were in the military and within 1 year and 120 days of being released from an active-duty period of 31 or more days, or

• Within 1 year and 120 days of retiring or being released from the Ready Reserve or National Guard, or

• Within 1 year and 120 days of assignment to the Individual Ready Reserve (IRR) of a branch of service, or to the Inactive National Guard (ING). This includes members of the United States Public Health Service Inactive Reserve Corps (IRC), or

• Within 1 year and 120 days of being put on the Temporary Disability Retirement List (TDRL).

  The coverage available to those who wish to keep their SGLI, or their family members coverage (FSGLI), upon separation is known as Veterans Group Life Insurance or VGLI. Now there are some pros and cons to converting and using this benefit and we aim to help those in this situation understand them.

SGLI to VGLI Coverage Amount

The SGLI coverage amount that you choose during service is actually the exact amount the government will let you carry over into your VGLI coverage. This is anywhere from $50,000-$500,000 available for conversion. This means as a middle aged adult you can guarantee up to $500,000.00 dollars in coverage for your family without the need of a medical exam or underwriting. Family Servicemember Life Insurance also has the same constraints in regards to the amount of coverage available to convert to VGLI.

VGLI Prudential Plan Cons

Only one company (Prudential Life) offers the official VGLI coverage. There is no real shopping the price because there is only this one provider available under that benefit. It is a 5 year renewable term, meaning every 5 years it increases in price and will do so for the remainder of the coverage. This can become quite expensive as you age. Unlike a whole life plan, the money put into the VGLI term policy does not accrue cash value and does not have any beneficial riders, such as accidental death, living benefits, or children riders.

VGLI Prudential Plan Pros

Premiums are standard rates based on a age bracketing system. This means there is not a dedicated extra fee for things like nicotine usage or pre-existing conditions and the plan never expires. The biggest advantage is the lack of medical underwriting and the convertibility benefit. At any time during VGLI you can convert to a privately owned individual plan based on the VA’s approved vendor list of about 11 companies to a permanent whole life policy. In the private sector these plans can be difficult to obtain in large amounts and are often very expensive. Under this benefit however, companies only charge standard rates and may only ask medical questions to improve your rate, not worsen.

Companies that allow VGLI conversion to a private plan

• American Fidelity Life Insurance Co.

• Bankers Life and Casualty Co.

• EMC National Life Co.

• Guardian Life Co.

• Life Insurance Company of Alabama

• Massachusetts Mutual Life Insurance

• Metropolitan Life Insurance Co.

• New York Life Insurance Co.

• Northwestern Mutual Life Insurance Co.

• Prudential Insurance Co.

• Trans World Assurance Co.

How to apply for VGLI or a VGLI Conversion

As mentioned above, your SGLI can be changed into VGLI or can be converted to a permanent plan with one of 11 approved companies. This is a great benefit ONLY if you are unable, due to disability or sickness, to achieve a standard or better rating on a privately owned plan. If you feel you are healthy enough for a better plan and price submit a contact request at the form below. If you would like to exercise this benefit because you are not eligible for a private plan, go to the Prudential OSGLI website for a application to start your VGLI plan. To exercise your conversion privilege from an existing VGLI plan, or a soon to end SGLI plan, into a commercially available approved permanent plan, submit a contact request at the form below.

Why a private plan is better than VGLI or a VGLI Conversion

If you are healthy and have no diagnosis or illnesses, you most likely can do much better in both the type of plan and premium costs on the private market than the guaranteed standard rates offered by VGLI or the conversions. Although the $500,000/00 benefit is large, for some it may not be large enough. If in the position where more than that limit is desired, you will have to look in the private market. We highly recommend that if you are healthy enough for a private plan, you let us explore the vast benefits and opportunities available to you on the open market. You do not have to be trapped in a VGLI term plan increasing in costs with zero cash benefits. There are straight term plans that stay steady in price for a level contract period and cash accruing whole life options. Almost every company offers above standard rates for all products. This can lead to massive savings in premium for both term and whole life products. Lastly, additional policy benefits such as indexed account options, living benefits, disability income, accidental death and children’s coverage are not available through your service related benefits. These are often inexpensive and sometimes free riders that can provide great benefits to the insured.