Veterans Life Insurance

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Life insurance provides financial protection and peace of mind, ensuring that your loved ones are cared for—even during unforeseen circumstances.

Life insurance is an optional financial tool that can provide a sense of security by leaving money to the people you designate as “beneficiaries” when you pass away.

Life insurance funds can be used to cover funeral expenses, pay off debts, replace lost income for dependents, finance education for children, and even serve as an inheritance or charitable donation.

Veterans Life Insurance Coverage Types

The Department of Veterans Affairs provides term life insurance to service members and their families. However, this coverage is only available to active duty military and is not portable – meaning it ends after separation. Even if you do retire from the military, VA life insurance plans only allow a maximum coverage amount of $500,000.

The lack of portability and coverage limitations of VA military life insurance plans is why service members should invest in other life insurance options.

There are five common types of life insurance policies, each designed to cater to varying financial goals, risk tolerances, and durations.

1. Whole Life Insurance

Whole life insurance is a type of “permanent life insurance,” meaning it provides coverage for the entirety of the insured’s life. A portion of each premium payment goes towards the cost of insurance protection, while the remainder goes to the policy’s “cash value” component, which accumulates tax-deferred interest.

The cash value portion can even be used during the insured person’s lifetime for various purposes, such as supplemental retirement income, estate planning, or funding big expenses. If the cash value is not used during the insured’s lifetime, it will be granted to the beneficiaries along with the death benefit after the insured person passes.

Whole life insurance is often used for long-term financial planning, estate planning, or providing a guaranteed inheritance for beneficiaries. However, it tends to have higher premiums than term life insurance due to the permanent coverage and cash value component.

2. Universal Life Insurance

Universal life insurance is a more flexible form of permanent life insurance. Whereas whole life insurance premiums typically remain fixed, universal life insurance allows policyholders to adjust their premium payment rates and death benefits. Universal insurance also has a cash value component, but the interest rate is tied to a specific index.

Universal life insurance typically costs less than whole life insurance because it requires less oversight.

3. Variable Life Insurance

Variable life insurance is also a form of permanent life insurance that includes an investment component. This means policyholders can disperse a portion of their premiums across investment options, such as stocks and bonds.

The policy’s cash value and death benefit fluctuate based on the performance of the chosen investments.

Variable life insurance offers a chance for higher returns, but it also comes with more risk compared to whole and universal life insurance.

4. Final Expense Life Insurance

Offering a smaller death benefit, final expense life insurance is a type of permanent life insurance that covers funeral and burial expenses. Premiums for final expense life insurance tend to be lower than other permanent life insurance policies, and it’s often available without a medical exam.

5. Term Life Insurance

Unlike the above forms of permanent life insurance, Term Life Insurance provides coverage for just a specific period of time. These periods typically range from 10-30 years and provides a death benefit to the policyholder’s beneficiaries if they should pass away during the specific term. There is no cash value component with term life insurance policies.

Life Insurance Frequently Asked Questions

How much is life insurance?

Life insurance costs vary based on age, health, coverage amount, and policy type. For a healthy individual, term life insurance might start at a few hundred dollars annually, while whole life or universal life policies can range higher, potentially reaching several thousand dollars per year. Getting personalized quotes is the best way to gauge the exact cost based on individual circumstances and coverage needs.

How does life insurance work after death?

The beneficiaries of the policyholder’s life insurance policy must notify the insurance company of the policyholder’s passing. From there, insurance companies typically request documentation such as a death certificate.

The insurance company may conduct an investigation to ensure the claim is legitimate. Once approved, the beneficiaries receive compensation according to the terms outlined in the original life insurance policy.

It’s important to note that the claim process may vary between different insurance companies.

Can you cash out life insurance while alive?

Yes, it’s possible to access the cash value of certain types of life insurance policies while you’re still alive. Policies like whole life, universal life, and some variable life insurance policies have a cash value component that accumulates over time. There are a few ways to access this cash value:

• Policy Loans: You can borrow against the cash value of the policy. The insurance company lends you money, and the cash value serves as collateral. These loans typically have low interest rates and don’t require a credit check, but unpaid loans may reduce the death benefit.
• Withdrawals: You can withdraw a portion of the cash value. Withdrawals up to the amount of premiums paid are generally tax-free, but any gains withdrawn may be subject to taxes.
• Surrendering the Policy: You can surrender the policy entirely, cashing it in for its cash value. However, surrendering a policy can result in taxes on any gains and might incur surrender fees, reducing the cash value received.

What life insurance do I need?

The best life insurance policy for your situation will depend on various factors. To tailor your policy to your specific needs, agents will need information on the following:

• Financial Standing (Debts, expenses, etc.)
• Family Situation (Number of dependents, marital status, etc.)
• Financial Goals
• Health and Lifestyle
• Any Existing Coverage

Familiarizing yourself with the different types of life insurance coverage can help you come to the conversation prepared.

Is life insurance worth it for a single person?

Life insurance is often seen as a means of providing financial security for dependents, like a spouse, children, or aging parents, in case of the insured person’s death. For a single person without dependents, the need for life insurance might be less pressing.

However, life insurance premiums are lower the younger you are. If you foresee having dependents in the future, getting a policy early on in life can lock in lower rates. If you have health conditions that could worsen over time, obtaining life insurance while you’re healthy can be beneficial.

Life insurance is a tool anyone can use to leave behind a financial legacy for family members, friends, or a cause that’s important to you.