Can life insurance be affordable?

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 in financial planning.

Life insurance provides important protection against financial loss as a result of death and is often available for a wide range of income levels. Having the right policy can provide funds for end-of-life expenses, an inheritance for loved ones or cover some outstanding debts.

Life insurance premiums vary based on several factors. Generally, the younger and healthier the person, the lower the monthly premium. However, these two factors alone do not paint the whole picture.

So what factors determine the cost of life insurance?

Policy type

VA life insurance options come in different types of coverage: term life and whole life. With a term life policy, the cover lasts for a fixed term (eg 10, 15 or 20 years) and offers only a death benefit. Because of the shorter term of coverage, term life insurance rates are generally lower than whole life. However, it also provides higher coverage amounts. The VA offers term life coverage through programs such as Veterans Group Life Insurance (VGLI), which allows transitioning service members to convert their Service Members Group Life Insurance (SGLI) coverage into a term life policy.

Whole life policies provide coverage for the entire life of the policyholder as long as premiums are paid; and because it builds cash value, premiums tend to be higher. Virginia’s newest whole life offering – Veterans Affairs Life Insurance (VALife) – will launch on January 1, 2023. VALife will offer guaranteed acceptance of lifetime coverage, up to $40,000, to veterans with any level of disability related with services. Virginia’s current offering to service-connected veterans — Disabled Veterans Life Insurance (S-DVI) — will end pending new enrollment after Dec. 31.

Coverage size

How much coverage someone chooses depends on what they want their policy to cover. If a policy is designed solely for funeral expenses, the amount of coverage may be less than a policy that is designed to cover all end-of-life expenses. A different policy may be suitable for an inheritance, income support for loved ones or an amount needed to pay off any outstanding debts.

Demographics and lifestyle

Those who are younger and healthier tend to have lower premium rates. The older a person is or the more diseases they have, the higher the rates can be. For most private sector offerings, women tend to pay less than men because of longer life expectancy. Many VA life insurance programs do not make these demographic distinctions.

In all programs, the VA does not consider gender when determining life insurance premiums, meaning that men and women receive the same competitive rates. Virginia’s newest life insurance offering — VALife — will be available 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.

The supplier

All insurance providers have different standards and guidelines that dictate their life insurance rates. This means that for the same type of policy, a person can get different rates from different companies, which highlights the importance of looking at several options before making a final decision on which policy to purchase.

Find out more

Veterans, service members and their families can start their life insurance journey by estimating 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.

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