Ever since World War I, the Department of Veterans Affairs (VA) has made life insurance available to both current and former members of the U.S. Military.
Recent news releases from the VA state that both the Servicemembers Group Life Insurance (SGLI) and Veterans Group Life Insurance (VGLI) programs will be adjusting their monthly premium rates to make certain that the program remains stable and able to provide quality life insurance for all members.
The SGLI program will adjust its monthly premium rate from 6.5 cents per 1,000 dollars back to the 2006 rate of seven cents per 1,000 dollars of life insurance. For the service member with the maximum 400,000 dollars of life insurance, this change will mean an increase of two dollars a month.
“It is common practice in the group insurance industry to adjust premium rates as reserve funds increase and decrease, which typically happened when there are changes in the economy and/or changes in the number of death claims,” stated a new release from the VA.
On the other hand, veterans 70 and older who are covered under VGLI will experience an increase of 2.2 percent to their monthly premium. This has been the first premium increase for this group in over 20 years.
In addition, veterans over 75 years old will experience another increase as monthly premiums increase every five years to account for old age and conditions that may follow. Monthly premiums are capped at the age of 75 and will not increase further with age.
“Older veterans have been paying premiums at a rate that is below what it costs to provide coverage,” stated in fact sheet released 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 costs of claims at those ages.”
To put this into perspective, see the following information:
-Veterans 70 and older who have 50,000 dollars of VGLI coverage will pay 2.50 dollars more a month – an increase from 112.50 to 115 dollars.
-Veterans 75 and older who have 50,000 dollars of VGLI coverage will face an additional 5 dollars towards their monthly premium – an increase from 225 to 230 dollars.
Note: All increases will become effective July 1st 2014.