Eligibility and Common Providers
Retired military members qualify for most civilian term life policies, but they also have access to veterans' group plans such as the Veterans' Group Life Insurance (VGLI) conversion and the Federal Employees' Group Life Insurance (FEGLI) if they remain federal employees. Eligibility typically requires proof of service, age under the insurer's maximum (often 75), and a standard medical underwriting process, though some carriers offer simplified issue options for healthy retirees.
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Cost Factors Specific to Military Retirees
Premiums for term policies depend on age, health, coverage amount, and term length. Retirees often benefit from lower rates because of disciplined lifestyle habits and access to group rates through military associations. VGLI, for example, bases rates on the insured's former Servicemembers' Group Life Insurance (SGLI) premium, adjusted for age. Private insurers may apply a modest surcharge for age but can offset it with discounts for membership in veteran organizations.
Benefits of Term Life for Retirees
Term life provides a death benefit that can cover final expenses, estate taxes, or support for surviving spouses and dependents. Because the coverage ends at a set term—commonly 10, 20, or 30 years—retirees can align the policy with expected financial obligations, such as mortgage payoff or funding a child's education. The payout is tax‑free and can be used to replace lost income, preserving the retiree's legacy.
Choosing the Right Term Length
When selecting a term, consider the period during which the benefit is most needed. A 10‑year term may suffice if the retiree's primary goal is to cover immediate debts. A 20‑ or 30‑year term is useful for longer‑term obligations, like caring for an elderly parent or ensuring a spouse's financial security well into their 80s. Align the term with the retiree's life expectancy and financial plan to avoid paying for unnecessary coverage.
Simplified Issue vs. Fully Underwritten Policies
Simplified issue policies require limited health information and no medical exam, making them attractive for retirees with minor health concerns. However, they carry higher premiums and lower coverage limits. Fully underwritten policies involve a medical exam and detailed health disclosure, often resulting in lower rates and higher coverage amounts. Retirees should weigh the convenience of simplified issue against potential cost savings of full underwriting.
Comparative Overview of Popular Options
| Plan | Eligibility | Typical Premium Range | Key Feature |
|---|---|---|---|
| VGLI | Former SGLI holders, up to age 75 | $30‑$70 per $10,000 (age‑adjusted) | Direct conversion from SGLI, no health exam |
| Private Group Policy (e.g., USAA) | USAA membership, generally age ≤ 70 | $25‑$60 per $10,000 | Group discounts, optional accelerated death benefit |
| Simplified Issue (e.g., AIG) | Any retiree, no exam | $45‑$90 per $10,000 | Fast approval, higher rates |
| Fully Underwritten (e.g., Prudential) | All retirees, medical exam required | $20‑$50 per $10,000 | Lowest rates, highest coverage limits |
Application Tips for Military Retirees
1. Gather service records and any existing VA or VGLI documentation.2. Compare group rates from veteran organizations with civilian offers.3. Consider a medical exam if health is good; it usually lowers premiums.4. Review policy riders such as accelerated death benefits or waiver of premium for disability.5. Lock in rates early, as premiums increase with age.