Can life insurance be affordable?
The answer is yes. Planning for the future often takes a back seat to the more immediate financial obligations that individuals and families have. The VA offers several life insurance options to consider during financial planning.
Life insurance provides significant protection against financial loss resulting from death and is often affordable for a wide range of income levels. Having the right policy can provide funds for end-of-life costs, an inheritance for loved ones or cover some outstanding debts.
Life insurance premium costs vary depending on several factors. In general, the younger and healthier the person, the lower the monthly premium rate. However, these two factors alone do not describe the whole picture.
So what factors determine the cost of life insurance?
Type of policy
VA life insurance options are offered in different types of coverage: term and whole life. With a term life policy, coverage lasts for a set term (eg, 10, 15 or 20 years) and provides only one death benefit. Because of the shorter term of coverage, term life insurance rates are usually lower compared to whole life. However, it also provides higher coverage amounts. The VA offers short-term life coverage through programs such as Veterans Group Life Insurance (VGLI), which allows transitioning service members to convert their Servicemembers Group Life Insurance (SGLI) coverage to a term life policy.
Whole life policies provide coverage for the entire life of the policyholder as long as the premiums are paid; and because it creates cash value, premiums are usually higher. VA’s newest whole life offering—Veterans Affairs Life Insurance (VALife)—will begin January 1, 2023. VALife will offer guaranteed acceptance of whole life coverage, up to $40,000, to veterans with each level of service-connected disability. VA’s current offering to service-connected veterans — Service-Disabled Veterans Life Insurance (S-DVI) — will end with new enrollment after Dec. 31.
Amount of coverage
How much coverage someone chooses depends on what they want their policy to cover. If a policy is intended only for funeral expenses, the coverage amount may be less than a policy intended to cover all end-of-life costs. A different policy may be suitable for an inheritance, income support for loved ones or an amount needed to pay off all outstanding debts.
Demography and lifestyle
Those who are younger and healthier tend to have lower premium rates. The older a person is, or the more medical conditions they have, the higher the rates can be. For most private sector offers, women tend to pay less than men due to a longer average life expectancy. Many VA Life Insurance programs do not make these demographic distinctions.
In all programs, the VA does not consider gender when setting life insurance premiums, meaning men and women receive the same competitive rates. VA’s newest life insurance offering – VALife – will be available on January 1, 2023 and has no medical enrollment requirements. For transitioning service members, VGLI also has no medical enrollment requirements as long as Veterans apply within the first 240 days of separation from the military.
All insurance providers have different standards and guidelines that dictate their life insurance rates. This means that for the same type of policy, an individual may receive different rates from different companies, underscoring the importance of looking at several options before making a final decision on which policy to purchase.
Veterans, service members and their families can start their life insurance journey by calculating their needs using the VA Life Insurance Needs Calculator.
To learn more about VA Life Insurance programs—including the new VALife program, which begins January 1, 2023—visit the VA Life Insurance website.