Know Your Post-Service Life Insurance Options

Everyone on active duty and many guard personnel and reservists are enrolled in Servicemembers Group Life Insurance (SGLI), but, after the military, how do you guarantee that your family is financially secure if something were to happen to you?

Below are a variety of life insurance policies to consider in the civilian world after you've separated from the military.

Veterans Group Life Insurance

When you separate from the military you have the option to convert your SGLI benefit over to VGLI. But, you have a limited time frame after separation to do so — 1 year and 120 days to be exact. After that window closes, you are no longer eligible for VGLI.

There are considerable perks to having VGLI:

• You can have the same coverage up to what you were covered under SGLI.
• Coverage does not expire, but premiums do increase with age.
• Premium rates are the same for smokers and non-smokers

Other Veterans Affairs life insurance policies to consider:

• Service-Disabled Veterans Insurance (S-DVI)
• Veterans Mortgage Life Insurance (VMLI)

Term Life Insurance

The term life policy is the most basic of all commercial life insurances. You purchase coverage at a specific price for a specific period of time, and its purpose is to pay a predetermined amount to your beneficiaries if you die. It has no investment component, and when the term expires you are no longer covered.

Whole Life Insurance

When you purchase a whole life policy, you have life insurance coverage that does not expire as long as you pay the monthly premium. Premiums remain constant throughout the life of the policy, so the younger you are when you buy it, the cheaper it'll be. The company invests a portion of your premium, and you can choose to receive dividends from your account or add the earnings back into your account to reduce your payments. The insurance company determines where your money is invested. The premiums for whole life insurance typically are more expensive than the premiums for term life.

Universal Life Insurance

Universal life policies are similar to whole life in that they do not expire and that there is an investment portion. The difference is you decide how much above the premium you invest. The company chooses the investment vehicle, which is generally restricted to bonds and mortgages. The investment and the returns go into a cash-value account, which you can use against premiums or allow to build.

Variable Life Insurance

Variable policies are similar to whole life and universal life policies, but there are a wider variety of investment options and you control where the money is invested, but there is more risk. This type of insurance also tends to be the most expensive. Beneficiaries will either receive the predetermined insurance amount or the insurance amount plus some of the procured cash from investments.

Which Insurance to Choose?

Deciding which insurance to choose will depend on your context and needs. Below are a few resources that can help you decide which policy might be right for you:

• Term Life Insurance vs. Whole Life Insurance
• What's the Best Policy?
• Which Life Insurance is Best?