When you leave the military, one of the first financial decisions you face is what to do with your life insurance. Most veterans default to Veterans’ Group Life Insurance (VGLI) because it’s the path of least resistance — no medical exam, easy conversion from SGLI, and a familiar government program. But VGLI’s biggest feature is also its biggest flaw: the premiums never stop climbing.
This guide breaks down the real cost difference between VGLI and private life insurance, so you can make an informed decision — not just the default one.
This article is provided by USMilitary.org, an independent educational resource. We are not affiliated with the Department of Veterans Affairs or any government agency. For official VGLI information, visit VA.gov.
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Key Takeaways
- VGLI premiums increase every five years and can exceed $690/month by age 65 for $500,000 in coverage
- Healthy veterans in their 40s can typically find private term coverage for significantly less than VGLI
- Private term insurance locks in your rate for 10–30 years; VGLI never locks in anything
- VGLI makes sense if you have serious health conditions that would disqualify you from private coverage
- The window to get the best private rates is when you’re young and healthy — ideally right after separation
- Some veterans benefit from holding both: a private term policy now plus VGLI as a bridge or supplement
Table of Contents
- What Is VGLI?
- The Real Cost of VGLI Over Time
- VGLI vs. Private Life Insurance: Side-by-Side Comparison
- Rate Comparison Table: VGLI vs. Private Term (2026)
- When VGLI Is the Better Choice
- When Private Life Insurance Wins
- Can You Hold Both?
- How to Make the Switch
- Frequently Asked Questions
What Is VGLI?
Veterans’ Group Life Insurance (VGLI) is a federal program administered by Prudential that allows service members to convert their SGLI coverage into civilian life insurance after separation. You can apply for VGLI within one year and 120 days of leaving active duty, and you can get coverage up to the amount you had through SGLI — currently a maximum of $500,000.
VGLI’s key selling points are well known: no medical exam required if you apply within 240 days of separation, coverage is guaranteed regardless of health status, and you can increase coverage by $25,000 every five years up to age 60. For many veterans, especially those with health issues developed during service, these features are genuinely valuable (read about the military spouse-side version of this decision).
But there’s a catch baked into the program that many veterans don’t fully appreciate until they hit their 50s and 60s.
The Real Cost of VGLI Over Time
VGLI premiums are set by age bracket and increase every five years. There is no locking in a rate, no reward for good health, and no cap on how high the premiums will climb. The table below shows current monthly premiums for a $500,000 VGLI policy, reflecting the updated rates that took effect July 1, 2025.
| Age Bracket | Monthly Premium ($500,000 VGLI) | Annual Cost |
|---|---|---|
| Under 30 | $30 | $360 |
| 30–34 | $37 | $444 |
| 35–39 | $47 | $564 |
| 40–44 | $65 | $780 |
| 45–49 | $90 | $1,080 |
| 50–54 | $135 | $1,620 |
| 55–59 | $238 | $2,856 |
| 60–64 | $400 | $4,800 |
| 65–69 | $690 | $8,280 |
| 70–74 | $1,075 | $12,900 |
| 75–79 | $1,830 | $21,960 |
| 80+ | $2,090 | $25,080 |
Source: U.S. Department of Veterans Affairs, VGLI rates effective July 2025
To put those numbers in perspective: a veteran who separates at 35 and keeps their $500,000 VGLI policy until age 70 will have paid roughly $180,000+ in premiums over that period — and the cost keeps climbing after that.
VGLI vs. Private Life Insurance: Side-by-Side Comparison
| Feature | VGLI | Private Term Life |
|---|---|---|
| Medical exam required | No | Often no (many carriers offer no-exam up to $1M+) |
| Premium increases | Every 5 years, guaranteed | Locked in for policy term (10–30 years) |
| Maximum coverage | $500,000 | $1M–$3M+ depending on carrier |
| Health underwriting | None | Health questions (rewards good health with lower rates) |
| Coverage length | Lifetime (as long as premiums paid) | Set term (10, 15, 20, or 30 years) |
| Cash value | No | No (term); Yes (whole/universal life) |
| Best for | Veterans with significant health conditions | Healthy veterans wanting predictable, affordable coverage |
Rate Comparison: VGLI vs. Private Term Life (2026)
The table below compares VGLI monthly premiums against estimated private term life rates for a healthy, non-smoking male at various ages for $500,000 in coverage. Private rates shown reflect 20-year term policies from competitive carriers.
| Age | VGLI Monthly (500K) | Private Term Monthly (500K, 20-yr) | Monthly Savings with Private |
|---|---|---|---|
| 35 | $47 | ~$23 | ~$24/mo |
| 40 | $65 | ~$32 | ~$33/mo |
| 45 | $90 | ~$53 | ~$37/mo |
| 50 | $135 | ~$85 | ~$50/mo |
| 55 | $238 | ~$155 | ~$83/mo |
Private term rates are sample estimates for a healthy non-smoking male. Actual rates vary by health, carrier, and state. VGLI rates reflect current VA schedules effective July 2025. Source: VA.gov
The savings compound significantly over a 20-year term. A 40-year-old veteran who locks in a private policy instead of VGLI saves roughly $400+ per year in their 40s alone — and avoids the sharp price jumps that hit in the 50s and 60s.
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When VGLI Is the Better Choice
VGLI isn’t the right answer for everyone, but it genuinely is the right answer in specific situations:
- Service-connected health conditions. If you developed a condition during service — PTSD, TBI, chronic pain, cardiovascular issues — that would cause private insurers to rate you up or deny you outright, VGLI’s no-questions enrollment is invaluable. You cannot be turned down.
- You’re applying within 240 days of separation. During this window, VGLI enrollment is guaranteed with no health review. For veterans who are uncertain about their insurability, this is a safety net worth using while you evaluate private options.
- You need a bridge policy. Some veterans use VGLI short-term while they shop private coverage, then drop VGLI once a private policy is in force.
- You’re already in your 60s or 70s. At this stage, the cost difference between VGLI and private options narrows, and qualifying for private coverage becomes harder. VGLI’s guaranteed continuity has real value.
If your goal is covering burial and end-of-life costs rather than income replacement, a smaller final expense policy may cost less than either VGLI or a full term policy — and most are available without a medical exam.
When Private Life Insurance Wins
For most healthy veterans under 55, private term life insurance will deliver better value than VGLI:
- You’re healthy. Private insurers reward good health with lower premiums. VGLI charges everyone the same rate in each age bracket — healthy or not. If you’re in good shape, you’re subsidizing everyone else in your bracket.
- You want a locked-in rate. A 20-year term policy purchased at 40 keeps the same monthly premium until you’re 60. VGLI will increase three times over that same period.
- You need more than $500,000. VGLI caps at $500,000. Many veterans with mortgages, young children, and income replacement needs require $750,000 to $1M or more in coverage.
- You want no medical exam. Companies like Ethos offer term coverage up to $1.5M or more with no medical exam — just online health questions. You get the no-exam convenience without VGLI’s escalating cost structure.
Can You Hold Both?
Yes — and for some veterans it makes sense. A common strategy is to carry a private term policy for the bulk of your coverage needs (say, $500,000 to $1M for 20 years to cover your working years and mortgage) and keep a smaller VGLI policy ($50,000–$100,000) as a permanent backstop that doesn’t expire. This gives you affordable, locked-in coverage for the years your family needs it most, while maintaining a modest guaranteed benefit regardless of what happens to your health later.
How to Make the Switch
If you decide private coverage is the right move, the process is straightforward:
- Get a private policy first. Never cancel VGLI until your private coverage is confirmed and in force. A lapse — even brief — can leave your family unprotected.
- Apply while you’re healthy. Every year you wait, private rates inch higher. A 40-year-old gets a meaningfully better rate than a 45-year-old.
- Shop no-exam options. Carriers like Ethos issue policies up to $1.5M with just online health questions — same-day coverage decisions in most cases.
- Cancel VGLI once your new policy is active. Contact OSGLI at 800-419-1473 to cancel. You can reduce VGLI in $10,000 increments rather than canceling entirely if you want to keep a small amount.
Ready to see what private rates look like for you? Compare multiple quotes on USMilitary.org→
Frequently Asked Questions
Many private carriers now offer no-exam policies up to $1M or more, requiring only online health questions. However, unlike VGLI, private insurers do evaluate your health history. If you’re in good health, you’ll typically qualify easily and save money. If you have significant conditions, VGLI may remain your best option.
Once you’re enrolled in VGLI, your coverage is guaranteed for life as long as you keep paying premiums. A subsequent health diagnosis cannot cause you to be dropped or have your rate changed outside of the normal age-bracket increases.
No. VGLI is term insurance with no cash value and no surrender fees. You can cancel at any time by contacting OSGLI. Just make sure your replacement coverage is in force first.
Yes. You can reduce your VGLI coverage in $10,000 increments at any time. This is a useful strategy if you want to keep a small VGLI policy as a permanent backstop while relying primarily on a larger, less expensive private term policy.
Yes. VGLI is available to all eligible veterans regardless of disability status, and no health review is required if you apply within 240 days of separation. Veterans with service-connected conditions who might not qualify for private insurance at standard rates should strongly consider VGLI enrollment before that window closes.
