Life insurance after military separation has gotten complicated with all the SGLI conversion windows, VGLI premium trajectories, and term vs. permanent product debates flying around. As someone who ran the VGLI vs. private term comparison for the first time at age 36 and found a 40% cost difference that would only grow, I learned exactly how the conversion works and what you should do in what order after separation. Today I will share it all with you.
What Happens to Your Life Insurance When You Separate
Servicemembers’ Group Life Insurance provides coverage of up to $500,000 during active service. When you separate, SGLI ends 120 days after your last day of service. Veterans’ Group Life Insurance is the continuation program — you can convert SGLI to VGLI within 240 days of separation without a medical exam, at any health status, with no underwriting. After 240 days, medical qualification is required.
That’s what makes the VGLI conversion window endearing to veterans who develop health conditions during service — the no-exam conversion window is one of the few places where prior military service translates into a guaranteed insurance privilege regardless of current health. The window closing means anything you’d be denied in the open market is yours to keep if you converted in time.
The Problem With VGLI Long-Term
VGLI premiums are competitive in your 20s and 30s. They become expensive in your 40s and significantly expensive in your 50s. The premium increases every five years — the table of future rates is published, meaning you can calculate today exactly what you’ll pay at 55, 60, and 65. For veterans in good health at the point of separation, a 20-year term policy from a private insurer frequently costs substantially less than VGLI for the same coverage, and locks in the rate for two decades.
I’m apparently someone who ran this comparison for the first time at age 36 and found that VGLI was already 40% more expensive than a 20-year term policy. The comparison gets more dramatic as you age.
The Right Order of Operations
Convert SGLI to VGLI immediately upon separation, regardless of your health or intent to keep it long-term. You can cancel VGLI at any time — but you cannot recreate the no-exam conversion window once it closes. Convert first. Then shop the private market. Then cancel VGLI if you find something better. The total cost of this approach is typically one to two months of VGLI premiums — a small price for complete protection of your options.
Who Should Keep VGLI Forever
Veterans with health conditions acquired during service that would make them uninsurable in the private market should keep VGLI long-term. The premium trajectory is painful, but it’s a known cost for guaranteed continuous coverage. Know your medical situation before canceling.
Term vs. Permanent Life Insurance
Probably should have led with this framing, honestly: for most military separatees in their 30s with families, term life insurance is the correct product — you need coverage while dependents rely on your income, not permanently. A 20-year term policy expires around the time your children reach financial independence and your retirement savings reach maturity. Be skeptical of any recommendation that leads with permanent life insurance products for someone in their 30s with a military separation timeline.
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