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VGLI premiums rise for older vets July 1

Older veterans will be paying higher premiums for Veterans Group Life Insurance as of July 1, said officials with the Veterans Affairs Department. The 2.2 percent increase will apply only to veterans 70 and older; it is the first premium increase for this group in 21 years, officials said. The cost will increase by 5 cents per $1,000 of monthly coverage. Veterans 70 and older who have $50,000 of VGLI coverage will pay $2.50 more a month increasing from $112.50 to $115. For those 75 and older, the monthly cost for $50,000 of coverage will increase by $5, going from $225 to $230. VGLI coverage is offered in $10,000 increments up to $400,000. Monthly premiums are based on age, and increase every five years up to age 75, when the rate is capped and does not increase further with age. Veterans 75 and older who have $400,000 of coverage will start paying $1,840 a month in July; up from the current $1,800 a month.

"Older veterans have been paying premiums at a rate that is below what it costs to provide coverage," states a fact sheet provided by the VA. "In fairness to veterans of all ages insured under VGLI, and in order to keep the program financially strong and competitive, we have to bring the rates more in line with the cost of claims at those ages. "Without this increase, the current rates are not sufficient to cover the cost of lifetime coverage."

The new rates will be reflected on the first bill veterans receive on or after July 1. If the VGLI premiums are paid by deduction from military retired pay or from VA compensation, the higher premium begins in July. Officials noted that many private insurance plans don't offer lifetime coverage, so individuals lose their coverage at a certain age. With VGLI, veterans can keep their coverage as long as they think they need life insurance, regardless of age. With less healthy and older individuals, the program pays more claims than a private insurance company might, officials said.

VA recommends that veterans review their life insurance needs to determine if they need less coverage, which would reduce their costs. For example, less insurance may be needed if a home is paid off, or children have left home, or the family has enough savings and investments to cover needs after the veteran's death.

"The senior veteran can't afford this," said Bob Latsch, who retired from the Army Reserve in 1995 as an E-5 and carries $150,000 in VGLI life insurance. He says he may have to reduce the amount of coverage, "although I was counting on that full amount for my wife because we didn't save anything." He now pays $337.50 a month for his $150,000 in coverage, but that will increase to $675 because he just turned 75. With the new premium rate increase in July, his rate will be $690 a month for $150,000 in coverage. "This means veterans 70 and older will have to shop around for insurance, and it's not right. It will be hard to find another insurance company that will take us. They have us over a barrel. We shouldn't be looked at as actuary numbers," Latsch said.

VA has already announced it is raising the rates of Servicemembers' Group Life Insurance. In July, life insurance rates for active-duty service members will increase to 7 cents per $1,000 of coverage, up from the previous 6.5 cents. VA had temporarily decreased the premiums in 2008 because the SGLI reserve fund had grown, and officials were intentionally drawing down that fund. The premium increase in July is necessary to ensure the program remains strong, officials said. VA notes that VGLI is unique for veterans because there is a period 240 days after separation in which veterans can apply with no health questions asked. This applies regardless of whether the veteran has a serious illness or disability when leaving the service, which would cause difficulty in trying to purchase life insurance on the private market. Financial experts urge veterans to shop around for life insurance before they leave the service, if they need to replace their SGLI coverage, to carefully compare prices and features of private insurance companies and VGLI. Troops should apply for insurance and make sure they have their needed insurance coverage before the VGLI "no health questions" application window ends 240 days after separation.

As always please see your local County Veterans Service Officer if you have any questions. You can contact your local VSO at (218) 631-7617 or by email at and as always have a great week.