Military Life Insurance Policy Basics: Convert SGLI to VGLI?
Navigating life insurance as a military service member or veteran is about more than just ticking a box on a checklist. It’s about protecting your family, securing your hard-earned military pension, and planning for the unexpected—both during your service and long after you retire.
Yet, for many service members, options like Servicemembers’ Group Life Insurance (SGLI) and Veterans’ Group Life Insurance (VGLI) are often presented as the default solutions without explaining their limitations or available alternatives. This can lead to a misunderstanding of their full financial picture, especially when it comes to qualifying for life insurance. Many service members may not be aware of other policies that could offer better coverage or lower premiums tailored to their personal health status.
What if you could take control of your life insurance in a way that better aligns with your financial goals? What if you could ensure financial protection for your loved ones, build a foundation for retirement income, or even leave a lasting legacy?
In this article, we’ll break down the basics of military life insurance policies, demystify common misconceptions, and explore more brilliant alternatives that could help you save money and achieve more.

What’s Missing From Your SBP vs Life Insurance Decision?
Most military families leave money on the table because they don’t know their options. Download the guide to discover the War Chest Strategy—the smarter alternative to SBP.
Whether you’re active-duty, transitioning to civilian life, or already retired, understanding your life insurance options is crucial to safeguarding your financial future. Let’s explore the truth about SGLI and VGLI and how to make the most informed decision for you and your family.
Understanding SGLI: Coverage and Limitations
SGLI is a low-cost group life insurance program automatically provided to eligible service members without a need to qualify. As of March 1, 2023, the maximum coverage amount increased to $500,000, with premiums set at $0.06 per $1,000 of coverage, regardless of age or health status.
Key Features of SGLI:
- Enrollment: Eligible service members are encouraged to enroll each year, ensuring immediate coverage.
- Uniform Premiums: Premiums are standardized not influenced by age, rank, or health status.
- Coverage Termination: SGLI coverage ceases upon separation or retirement from service.
A Key Consideration: If you’re younger and healthier than the average American, SGLI may not be the most cost-effective choice. Group policies like SGLI pool risks across all members, meaning your premiums subsidize others who may not qualify for private insurance due to health issues.
Transitioning to VGLI: What You Need to Know
Because SGLI coverage ends upon leaving military service to maintain life insurance protection, service members can convert their SGLI to VGLI within one year and 120 days from their discharge date. Applying within 240 days allows coverage without proof of good health.

Evaluating VGLI: Pros and Cons
Advantages:
- Guaranteed Acceptance: If applied within the specified timeframe, no health assessment is required, allowing veterans to retain coverage post-service.
- Flexible Coverage Amounts: Veterans can obtain up to $500,000 and adjust coverage in $10,000 increments.
Disadvantages:
- Increasing Premiums Based on Age: Unlike SGLI, VGLI premiums increase every five years as the policyholder ages, potentially becoming cost-prohibitive in older age.
- No Cash Value Accumulation: VGLI policies do not build cash value, offering only death benefits.
- No Reward for Good Health: There is no option for lower premiums due to above-average health.
Exploring Alternative Life Insurance Options
Beyond SGLI and VGLI, service members and veterans can access various life insurance products tailored to their unique needs.
Term Life Insurance:
- Cost-Effective Coverage: Offers substantial death benefits at lower initial premiums.
- Fixed Term Lengths: Policies are set for specific periods (e.g., 10, 20, or 30 years).
- No Cash Value: Does not accumulate cash value; benefits are paid only upon death during the term.
Considerations:
- Health Assessments: Requires medical underwriting; healthier individuals benefit from lower premiums.
- Coverage Expiry: Once the term ends, coverage ceases, and renewing at an older age can be costly.
Permanent Universal Life Insurance:
- Permanent Coverage: Provides lifelong protection as long as premiums are paid.
- Cash Value Accumulation: Builds cash value over time, which can be borrowed against or withdrawn.
- Flexible Premiums: policy owners can choose when, how often, the frequency of payments, and even how much they want to contribute. Premiums can be adjusted at any time.
Considerations:
- Financial commitment: These are more expensive than term life insurance due to the permanency of coverage and require additional investment beyond the underlying insurance cost.
- Complexity: Policies can be intricate, requiring thorough understanding before commitment.

The “Term and Invest the Rest” Strategy:
The “Term and Invest the Rest” approach is a popular recommendation among financial bloggers, but it comes with significant flaws that service members should carefully consider.
This approach involves purchasing term life insurance and investing the premium savings elsewhere. While it offers flexibility, it assumes consistent investment returns and disciplined saving habits, which may only suit some.
This strategy assumes that individuals will consistently invest the premium savings from choosing term insurance, that investment returns will reliably outpace inflation and market volatility, and that financial discipline and favorable market conditions will align perfectly over the decades.
These assumptions often prove unrealistic, particularly for those navigating the unique financial challenges military families face.
Why This Strategy Falls Short for Career Military Families
Military families face unique financial challenges, such as frequent moves, limited spousal career opportunities, and the potential for unexpected medical costs. These become incredibly challenging during the military retirement process.
Too often, many military retirees are unaware of the need to address coverage, and the issue becomes more complicated if they try to address it while going through the VA disability and new job search process. A better solution involves insurance products combining death benefit coverage with equity growth and liquidity. We’ll discuss this more below.
Myths About Military Life Insurance
Military life insurance policies like SGLI and VGLI often come with assumptions and misconceptions. Here are some of the most common myths and the truths behind them:
Myth: Military life insurance is always the cheapest option.
Reality: While SGLI is affordable during active service, transitioning to VGLI only remains cost-effective post-retirement. For young, healthy veterans, private insurance often offers lower premiums over the long term.
Myth: Life insurance isn’t necessary if you have a military pension.
Reality: A pension might cover daily expenses, but it won’t replace the financial security of life insurance if the unexpected happens. Additionally, life insurance provides a legacy for loved ones, something a pension cannot do.
Myth: You only need to plan for life insurance once you retire.
Reality: Planning early while still young and healthy locks in lower rates and ensures you have the right coverage when needed most.
Dive Deeper into US VetWealth’s Innovative Insurance Option
US VetWealth offers a powerful alternative to the traditional SGLI-to-VGLI conversion: a low-cost convertible term insurance policy designed specifically for the military community.
Here’s why this option stands out:
Introducing the War Chest Strategy
US VetWealth offers an innovative alternative: War Chest Strategy. This strategy combines life insurance with investment components, providing death benefits alongside potential cash value growth.
Key Benefits:
- Customized Coverage: Tailored to individual needs, offering flexibility in coverage amounts and investment options.
- Potential for Cash Value Growth: Opportunities for tax-advantaged growth, supplementing retirement income.
- Protection Against Market Downturns: Designed to safeguard against negative market returns.
Real-Life Case Studies
Understanding the complexities of military life insurance becomes clearer through real-life examples. At US VetWealth, we’ve helped service members make more informed decisions with their insurance. Here’s a preview of what you can learn from our clients’ stories:
- Case Study 1: A transitioning service member who saved thousands by opting for a private term policy instead of converting to VGLI.
- Case Study 2: A retired veteran who leveraged US VetWealth’s War Chest Strategy to provide a death benefit and supplemental retirement income.

These stories—and more—are available inside our Military Retirement Blueprint Knowledge Portal. This resource is designed to guide you step-by-step through military benefits decisions and financial planning needed during the military retirement process to help you make confident, informed decisions. Access it today to see how others have navigated these choices.
Conclusion: Making Informed Decisions
When it comes to military life insurance policies, there’s no one-size-fits-all solution. Whether you’re an active-duty service member, transitioning veteran, or retiree, understanding your options and planning early is essential to securing your financial future.
Selecting the appropriate life insurance policy is a critical aspect of financial planning for service members and veterans. Understanding the features, benefits, and limitations of SGLI, VGLI, and alternative options empowers individuals to make informed decisions that align with their financial goals and family needs.
At US VetWealth, we specialize in directing military families through these complex choices. Our expertise ensures that you receive personalized advice tailored to your unique circumstances.
We’re here to help you explore alternatives that protect your military pension and ensure a legacy for your loved ones. Schedule a free consultation today to discover how to lock in low-cost coverage, grow your wealth, and gain peace of mind for the years ahead.

Frequently Asked Questions (FAQ)
Q: What happens to my SGLI when I leave the military?
SGLI coverage ends 120 days after separation. You can convert it to VGLI or opt for private insurance to maintain life insurance protection.
Q: Is VGLI my only option after retirement?
No. Private-term or whole-life insurance policies often offer better long-term value for younger, healthier veterans.
Q: How do VGLI premiums compare to private insurance?
VGLI premiums increase every five years based on age. Private insurance premiums, locked in at the time of purchase, can be much lower for healthy individuals.
Q: Can I keep my SGLI if I’m medically retired?
Yes, but only for a limited time. You’ll need to convert it to VGLI or explore alternatives for ongoing coverage.
Q: Are life insurance death benefits taxable?
Generally, life insurance death benefits are not subject to federal income tax, providing tax-free financial security to your beneficiaries.

Scott R. Tucker
Scott R. Tucker is an author, speaker, and founder of US VetWealth, a military retirement financial consulting brand dedicated to helping military retirees take control of their financial future. A West Point graduate and former Army officer with over 16 years of experience, Scott has guided thousands of veterans in creating personalized financial strategies prioritizing autonomy, protection, and profitability. Through his books, presentations, and innovative online platform, Scott empowers retirees to maximize their benefits and build a secure, purpose-driven future.
Disclaimer: The views expressed by Scott R. Tucker are for educational purposes only and do not constitute financial, tax, or legal advice. Scott is a licensed insurance professional offering financial services and products. Always consult with a qualified advisor before making financial decisions.