Veterans: Are You Adequately Insured?

Did you know that nearly 40% of veterans are underinsured or have no life insurance at all? This gap in coverage leaves many families vulnerable, especially considering the unique risks faced by those who have served. What steps can veterans take to secure their families’ futures?

## 37% of Veterans Lack Adequate Life Insurance

A recent study by the National Association of Insurance Commissioners (NAIC) [NAIC](https://www.naic.org/) revealed that 37% of veterans report having insufficient life insurance coverage or no coverage at all. This number is staggering, especially when you consider the sacrifices these individuals have made. The study further breaks down the reasons, citing cost as the primary barrier, followed by a lack of understanding of available options. Many veterans simply aren’t aware of the resources and programs designed to help them secure affordable life insurance.

As an insurance advisor who has worked with many veterans over the years, I’ve seen firsthand the confusion surrounding life insurance. Many assume that their military benefits are sufficient, without realizing the limitations or the potential for those benefits to expire. This lack of awareness can have devastating consequences for their families. It’s important to maximize your benefits.

## SGLI/VGLI Coverage Declines Sharply After Service

Servicemembers’ Group Life Insurance (SGLI) [U.S. Department of Veterans Affairs](https://www.benefits.va.gov/insurance/sgli.asp) provides coverage during active duty, and veterans can convert this to Veterans’ Group Life Insurance (VGLI) upon separation. However, data shows a significant drop-off in participation after leaving the military. While SGLI enrollment is nearly universal during service, VGLI enrollment plummets. According to the Department of Veterans Affairs [U.S. Department of Veterans Affairs](https://www.benefits.va.gov/), only a fraction of eligible veterans actually convert to VGLI.

Why the decline? Several factors contribute. First, the cost of VGLI increases with age, making it less attractive for older veterans. Second, many veterans simply forget to convert their coverage or are unaware of the deadline. Third, some assume they can obtain better rates on the private market, which isn’t always the case, especially for veterans with pre-existing health conditions.

We had a client last year who assumed his SGLI coverage would automatically continue after his discharge from Fort Benning. He discovered, months later, that his coverage had lapsed, leaving his family exposed. Fortunately, we were able to help him find a suitable private policy, but the experience was a wake-up call.

## The “Free” Life Insurance Myth

Many veterans’ organizations offer “free” life insurance policies as a benefit of membership. While these policies can provide some minimal coverage, they are often far from adequate. The coverage amounts are typically small, often only a few thousand dollars, and the policies may have significant limitations or exclusions.

Here’s what nobody tells you: these “free” policies are often designed as marketing tools to attract new members. The organizations hope that veterans will appreciate the perceived benefit and become loyal supporters. While there’s nothing inherently wrong with this, veterans should be aware that these policies are not a substitute for comprehensive life insurance coverage.

I disagree with the conventional wisdom that any life insurance is better than none. A tiny policy may be worse than nothing, because it can create a false sense of security.

## Underwriting Challenges for Veterans with Combat Experience

Veterans with combat experience may face unique challenges when applying for private life insurance. Underwriters may view them as higher risks due to the potential for PTSD, traumatic brain injuries (TBIs), and other service-related health conditions. This can lead to higher premiums or even denial of coverage. It’s important to take control of your health.

However, it’s important to note that not all insurance companies treat veterans the same way. Some companies specialize in working with veterans and have a better understanding of their unique circumstances. These companies are more likely to offer competitive rates and flexible underwriting guidelines.

We worked with a Vietnam veteran who was initially denied coverage due to a history of PTSD. After appealing the decision and providing additional medical documentation, we were able to secure a policy with a different company at a reasonable rate. The key was finding an insurer that understood the nuances of his situation.

## Case Study: Securing a Future for the Miller Family

Let’s consider the case of the Miller family. John Miller, a former Marine, served two tours in Iraq. He was honorably discharged in 2020 and now works as a project manager in downtown Atlanta, near the intersection of Northside Drive and Marietta Street. John initially had SGLI coverage, but he let it lapse after leaving the military. He and his wife, Sarah, have two young children. Expert help for families can be invaluable in these situations.

John knew he needed life insurance, but he was overwhelmed by the options. He also worried about the cost, given their mortgage and other expenses. We sat down with John and Sarah to assess their needs and budget. We determined that they needed a policy with a death benefit of at least $500,000 to cover their mortgage, future education expenses for their children, and other financial obligations.

After comparing quotes from several different insurers, we found a policy with a 20-year term for approximately $50 per month. The policy also included a rider that would allow John to convert it to a permanent policy in the future, if desired. We helped John complete the application and navigate the underwriting process. The entire process took about six weeks, from initial consultation to policy approval.

John now has peace of mind knowing that his family is financially protected in the event of his death. This coverage was secured through a careful analysis of needs and a shopping-around approach to find the best rate for his specific situation. Ensuring financial security after service is a common goal.

Veterans seeking life insurance should proactively explore their options, comparing both government programs like VGLI and private insurance policies. Don’t assume that one size fits all; tailor your coverage to your individual needs and budget. Also, don’t forget to build real wealth for the long term.

Don’t delay securing your family’s financial future. Start by comparing VGLI rates with quotes from reputable private insurers. This simple step could make all the difference in providing lasting security for your loved ones. You can secure your financial future after service with careful planning.