The short answer
If you only read one section, read this one.
- SGLI covers you during service but ends at separation. You have 120 days to convert. Do not let that window close without a plan.
- VGLI is an option but expensive. Rates increase every 5 years and become uncompetitive quickly compared to private term.
- Most veterans get better value from private term insurance — but you need to apply before health issues arise. The window matters.
Understanding SGLI coverage
Servicemembers’ Group Life Insurance (SGLI) is low-cost group term coverage automatically available to active-duty service members, members of the Ready Reserve and National Guard, and certain other categories. Coverage is available in increments of $50,000 up to the maximum of $500,000 and costs $0.06 per $1,000 of coverage per month — so maximum coverage runs $30/month.
SGLI is one of the best deals in life insurance. The cost is exceptionally low, coverage applies even in combat zones, and there is no underwriting — you are covered regardless of health. Spouses of active-duty service members can also get Family SGLI (FSGLI) coverage of up to $100,000.
The limitation is that SGLI ends when service ends. Specifically, coverage terminates 120 days after separation, discharge, or release from duty. That 120-day window is when you need to act.
What happens at separation
At separation, you have two primary coverage options: convert to Veterans’ Group Life Insurance (VGLI) or apply for private life insurance. You also have the option to do both or neither. The right choice depends on your health, your budget, and how quickly you act.
The critical variable is health. If you separated with service-connected conditions, combat injuries, PTSD, or other diagnoses that would cause a private insurer to rate or decline you, VGLI is a lifeline because it requires no medical underwriting. If you separated in excellent health, you have options — and the private market likely gives you better long-term value.
Do not wait to decide. The 120-day window after separation is the last point at which SGLI holders can convert to VGLI without underwriting. After that window closes, VGLI requires a health qualification that not all veterans will pass.
VGLI: pros and cons
VGLI is permanent group term coverage available to eligible veterans. There is no end date — coverage continues as long as you pay premiums. The coverage amount starts at whatever your SGLI benefit was and can be increased in certain circumstances.
No medical underwriting (within 120 days)
If you have health conditions that would make private coverage difficult or expensive, this is the biggest advantage VGLI offers.
Guaranteed renewable
VGLI cannot be cancelled due to health changes. Once you have it, you keep it as long as you pay premiums.
Rates increase every 5 years
VGLI premiums are age-banded and reset upward every 5 years. A 40-year-old veteran pays significantly more than a 35-year-old, and so on. By your 50s and 60s, VGLI becomes very expensive.
No level term period
Private term insurance locks in your rate for 10, 15, 20, or 30 years. VGLI never locks in — rates always move up. A healthy veteran who locks in a 20-year private term at separation will almost always pay less over that window.
Private term vs VGLI: cost comparison
The cost gap between VGLI and private term widens with age. Here is an illustrative comparison for a male veteran at different ages, $400,000 in coverage:
| Age | VGLI monthly rate | Private term (preferred) monthly |
|---|---|---|
| 30–34 | ~$52/mo | ~$18–$25/mo (20-year term, locked) |
| 40–44 | ~$108/mo | ~$35–$50/mo (20-year term, new policy) |
| 50–54 | ~$236/mo | ~$90–$125/mo (10-year term, new policy) |
| 60–64 | ~$580/mo | ~$200–$280/mo (10-year term, new policy) |
The lesson: healthy veterans who lock in private term at separation almost always come out ahead. The window to do that affordably is right after you separate — before health issues develop and while your age works in your favor.
SBP (Survivor Benefit Plan) for retirees
Military retirees — those who serve 20+ years and receive a pension — face an additional decision: whether to elect the Survivor Benefit Plan (SBP) at retirement. SBP is a government-run annuity that continues paying a portion of your military retirement pay to your surviving spouse or other beneficiaries after you die.
SBP covers up to 55% of your retirement pay. The cost is 6.5% of the covered amount, deducted from your retirement check. If your spouse predeceases you, premiums are refunded. If you divorce, there are coverage and election complexities.
SBP vs private life insurance
SBP and life insurance solve related but different problems. SBP replaces income stream (your pension) after death; life insurance provides a lump sum. Many advisors suggest that healthy retirees compare the cost of SBP over their expected lifetime versus buying term insurance to cover the same income gap. There is no universal answer — it depends on your health, your spouse’s age and health, and your financial picture.
What is consistently true: the SBP election at retirement is irreversible within the first year. Declining it and relying on private life insurance means the insurance must stay in force. If it lapses, your spouse has no coverage. That operational risk favors SBP for retirees who are not disciplined savers.
TSP beneficiary designations
The Thrift Savings Plan (TSP) does not follow your will. It passes by beneficiary designation, and the TSP has its own form (Form TSP-3) that supersedes everything else — including a court order, except in very limited circumstances.
If you have never filed a TSP-3 or if you have a life change (marriage, divorce, death of a named beneficiary), your TSP may be going to the wrong person. Log in to your TSP account and confirm your designation is current. This is a five-minute task that most service members and veterans never complete.
SGLI also has a beneficiary designation separate from your will. Check both while you are in service.
Bottom line
Military families have better coverage during service than almost anyone — and face a harder transition at separation than most people realize. SGLI is excellent; VGLI is a safety net that healthy veterans often outgrow financially. The optimal path for most separating service members is to apply for private term insurance in the 120-day window while health is good, and use VGLI only as backup for conditions that private insurers will rate.
Retirees have the additional SBP decision, which deserves serious analysis before the irrevocable election at retirement. And every service member, regardless of stage, should have current beneficiary designations on file for both SGLI and TSP.
SGLI and VGLI rates and rules are subject to change. Confirm current rates and eligibility with the VA or your branch’s benefits office. Sample private term rates are illustrative. Educational only — not financial advice.