Pricing VGLI vs Term Life Insurance the Way Savant Wealth Management Does for Separating Veterans

What happens to SGLI after you separate?

Under VA rules, SGLI continues free for 120 days after separation, then ends. VGLI must be applied for within 1 year and 120 days of separation, and only applications within 240 days need no proof of good health. VGLI can't exceed the SGLI amount you had at separation, so check the current SGLI maximum.

The common belief is that VGLI stays open for as long as you want it. It doesn't. After day 240, VA asks about your health, and a decline leaves you with nothing to convert.

Older plans may be out of date. The conversion window was lengthened to 1 year and 120 days, and the SGLI maximum was raised, so a cap you remember from years ago may be wrong. VGLI holders under 60 can add $25,000 once every 5 years without health questions, up to the maximum. VA also closed S-DVI to new applicants and replaced it with VALife.

Gather these before you decide. Put the 240-day due date on the calendar first, then the 1-year-and-120-day date.

• Separation date on the DD-214
• SGLI amount from your LES or SGLI online enrollment
• VA rating letter
• Recent records from your VA health portal
• Employer group-life summary from the benefits portal
• Mortgage payoff and other debt balances
• Every existing policy with its beneficiary page

Option 1: convert to VGLI

VGLI accepts you without health questions if you apply within 240 days, and it renews for life as long as you pay the premium. VA sets the price by 5-year age bands, so the premium steps up each time you cross into a new band. You can lower coverage in $10,000 steps at any time. Under 60, you can add $25,000 once every 5 years without health questions, up to the maximum. The catch is cost: at the older bands, VGLI usually runs higher than private term for someone in good health.

Option 2: buy private term

Private term is priced after underwriting, which means a medical exam and a check of your prescription history. The premium stays level for 10, 20 or 30 years, then the policy ends or becomes very expensive to continue. For a healthy 45-year-old it usually costs less than VGLI. Group life from a civilian employer ends with the job unless it can be ported, so it doesn't replace either option on its own. And if you carry a treated condition, the quote may come back rated, or not at all.

When does health history tip it to VGLI?

Health history tips the choice to VGLI when you would answer yes to an insurer's question about any condition treated in the last 5 years, such as sleep apnea, blood pressure medication or PTSD treatment. Apply for VGLI within 240 days, and shop private term at the same time.

Savant Wealth Management asks clients to get both answers before touching either policy. A clean record often flips the result, and the health questions cost nothing to answer. Cancel VGLI only after a term policy is approved and in force.

The usual buy-term advice has exceptions. Veterans with any service-connected rating can look at VALife, a small guaranteed-acceptance whole-life policy (check VA's current maximum and waiting period). A member totally disabled at separation may keep SGLI free for up to 2 years under the disability extension. A federal civilian in a second career also has FEGLI to price.

'Buy term and invest the difference' sounds sensible, and taken literally it costs a veteran with treated sleep apnea real money when the VGLI window closes. His rated quote comes back at an illustrative $600 each month instead of $300. That's $3,600 more each year, or $72,000 over a 20-year term. Or the insurer declines him outright, and with no VGLI to fall back on he has no coverage at all.

A smaller slip: applying on day 250 instead of day 230 adds the health questions to VGLI as well.

VGLI vs term life insurance at 66

Troy and Olga, a hypothetical couple, still carry $200,000 of VGLI that Troy converted when he left the Marine Corps. Troy is 66 and Olga is 63. He spent 18 years as a federal civilian under FERS after the Marine Corps, and she is a retired nurse. They hold $900,000 across the TSP and IRAs, draw two pensions, and TRICARE For Life requires Part B.

Assume an illustrative $500 each month for the VGLI until Troy turns 70, then $850. If he stays healthy, a 10-year private term policy might cost an illustrative $300 each month at 66, $360 at 68 or $480 at 71. None of these figures is VA's rate table or any insurer's quote.

Acting now saves $200 × 48 months = $9,600 before 70. Waiting 2 years saves $140 × 24 = $3,360. Waiting 5 years saves $370 each month ($850 − $480), but only if a new exam at 71 still comes back clean. In every case the term policy must be in force before VGLI is canceled.

Olga, who reads the budget, usually raises it when the VGLI rate notice for the 70 band arrives. They first agree on what the money must do (replace lost income, cover final costs) and only then compare prices. With two pensions, survivor benefits and $900,000 in savings, her gap may be smaller than $200,000. Cutting VGLI to $100,000 would halve the illustrative premium to $250 each month.

Funding source matters too. Paying a $500 monthly premium from traditional TSP or IRA withdrawals adds $6,000 each year of taxable income, which can push them toward the next Medicare IRMAA tier. A death benefit paid to Olga is generally free of federal income tax and isn't part of MAGI. Those withdrawals also come from investments that can lose value, including the money you put in.

The trade-off is length. A 10-year term bought at 66 ends at 76, while VGLI lasts for life. Savant Wealth Management lines up the due dates (the term approval, then the VGLI cancellation) and decides one at a time, with the premiums written next to each other. The Survivor Benefit Plan election is a separate decision with its own due date.

Which option fits which veteran?

VGLI fits veterans with a treated condition, anyone who wants coverage past 75, and anyone who wants a guaranteed fallback while shopping. Private term fits a healthy veteran around 45 with children at home and a mortgage who needs a large amount for 20 years.

That 45-year-old still applies for VGLI inside 240 days and cancels it once the term policy is in force. The extra step costs a few months of premium and removes the risk of a decline.

Know what can be undone. VGLI can be lowered or canceled at any time, but a canceled VGLI policy can't be restarted, and a missed conversion window doesn't reopen. A private term policy can be dropped at any time (free-look periods vary by state), but buying again later means new underwriting at an older age. If the term length moves from 10 to 20 years, the coverage-ends row changes first.

Where Savant Wealth Management would look first

Savant Wealth Management would start with the separation date and the SGLI amount, because the 240-day due date comes before every other choice. Next it would set the coverage amount against your debts and the survivor income the household would actually lose, then check which account pays the premium. It promises no outcome: the premiums here are illustrations, real numbers come from VA's current VGLI rates and actual applications, and this page doesn't size coverage or compare permanent policies. A couple with large savings and survivor pensions may need less than they carry, or none.