By Daniel Korleski, MBA
There are plenty of reasons to consider purchasing life insurance. Life insurance protects your family by letting you leave them a non-taxable amount at the time of your death. If you are the primary earner in your family, life insurance can offer you invaluable peace of mind knowing that your family will be protected should anything happen to you.
Veterans in particular have enough to worry about. So, the good news is they have access to an array of life insurance options that cater to their specific needs. But which one is the best option for your specific situation? Of course, much of it depends on your own financial plan and wealth management strategy. And if you are in good health, it may make sense for you to look for policies outside of the specific military options.
We at Cobalt Private Wealth put together an outline of the best military life insurance plans available for veterans, and we hope this road map helps as you identify which type of plan makes sense for you and your family.
SERVICEMEMBERS’ GROUP LIFE INSURANCE AND VETERANS’ GROUP LIFE INSURANCE
If you have served in the military, you probably are familiar with Servicemembers’ Group Life Insurance (SGLI) and Veterans’ Group Life Insurance (VGLI). SGLI offers up to $400,000 in coverage in $50,000 increments. Once you are discharged from the service, you can convert your SGLI to VGLI, offering coverage of up to $400,000 in $10,000 increments. (1)
You must convert your coverage to VGLI within one year and 120 days of discharge. And to avoid having to take a medical exam or prove your insurability, you must submit your application within 240 days of discharge. (2)
VGLI is extremely affordable for younger veterans, costing only $32 per month for a 29-year-old veteran or younger. But the big drawback is that the premiums increase drastically every five years, and when you reach the age of 75, the premium reaches $1,840 per month. (3)
The other major drawback to consider is that VGLI only offers term life insurance, which means that the policy has a death benefit only and there is no cash value as an investment.
AMERICAN ARMED FORCES MUTUAL AID ASSOCIATION (AAFMAA)
AAFMAA also offers term life insurance if you are a member of the association. Through this program, you can get up to $800,000 in term life insurance coverage. Specific benefits of purchasing a life insurance policy through AAFMAA includes survivor assistance services, no aviation exclusions or surcharge, and no war or terrorism exclusions. (4)
USAA LIFE INSURANCE
Another really popular option for veterans is purchasing USAA Life Insurance as supplemental coverage to VGLI. You can also purchase it as traditional life insurance or opt for term life insurance coverage.
USAA is currently advertising rates as low as $12 a month, but keep in mind that this rate is typically reserved for the very young who are in great health. For their term life insurance option, terms vary between 10 and 30 years at an interval of five years and premiums will stay the same for the duration. (5)
Some other benefits for veterans include a term life event option rider, allowing you to increase your coverage if you get married, buy a house, or have a baby before age 35. Additionally, USAA guarantees SGLI replacement, allowing veterans to roll over some or all of his or her SGLI coverage. (6)
WE CAN HELP
We hope this article helps you choose a life insurance plan that works for you. If you have any questions, please do not hesitate to reach out to me at danielkorleski@cobaltprivatewealth.com or call me at 719-332-3863 to schedule an introductory meeting.
ABOUT DAN
Daniel Korleski is the President & CEO for Cobalt Private Wealth, where he helps his clients grow, manage, and protect their wealth so they can work toward a stronger financial future. With over 30 years of experience in the financial services industry, Dan has served as the managing director for Investment Trust Company, chief investment officer for the Wealth Management Group at American National Bank in Denver, and regional investment manager for the Greater Colorado Region of the Private Bank at Wells Fargo, where he oversaw the management of over $2 billion. In 2008, he was appointed by the mayor of Colorado Springs to the City’s Investment Advisory Committee. Dan holds an MBA in investment management from Midwestern State University in Wichita Falls, Texas, a Bachelor of Science in Finance from Florida State University, and is a member of both the CFA Society Colorado and The Financial Planning Association.
Dan loves to give of his time to his community and has served as Chair of the Board of Trustees of Pikes Peak Hospice Foundation, the Board of Directors of Catholic Charities of Central Colorado, President of the Broadmoor Rotary Club and Vice President of the Board for the Pikes Peak Chapter of Trout Unlimited. Dan was born and raised in Spain and is fluent in Spanish. When he’s not working, you can find him traveling around the world with his wife of 23 years, Montse, fly fishing, golfing, and hiking with his golden retriever, Curro. To learn more about Dan, connect with him on LinkedIn.
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(1) https://www.va.gov/life-insurance/options-eligibility/sgli
(2) https://www.benefits.va.gov/INSURANCE/resources_handbook_ins_chapter12.asp
(3) https://www.benefits.va.gov/insurance/docs/VGLI_Premium_Change.pdf
(4) https://www.aafmaa.com/life-insurance
(5) https://www.usaa.com/inet/pages/insurance_life_main
(6) https://www.leaplife.com/the-3-best-term-life-insurance-options-for-veterans
