Veterans’ Benefits: Current Life Insurance
Programs

Christine Scott
Specialist in Social Policy
November 16, 2010
Congressional Research Service
7-5700
www.crs.gov
R41435
CRS Report for Congress
P
repared for Members and Committees of Congress

Veterans’ Benefits: Current Life Insurance Programs

Summary
The Department of Veterans Affairs (VA) administers and supervises several life insurance
programs for active servicemembers and veterans. The VA supervises the Servicemembers’ Group
Life Insurance (SGLI) and Veterans’ Group Life Insurance (VGLI) programs, which are
administered by the Office of Servicemembers’ Group Life Insurance (OSGLI), a division of
Prudential Financial. The Service-Disabled Veterans’ Insurance (S-DVI) program, on the other
hand, is administered entirely by the VA. Access to VA-administered life insurance programs
gives servicemembers and veterans, who may not be eligible for private life insurance policies,
the opportunity to carry group life insurance. This provides for their families in the event of the
servicemember’s or veteran’s death.
In September 1965, with the passage of P.L. 89-214, Congress established the SGLI program and
mandated the VA to enter into an agreement with the private insurance industry to meet the
insurance needs of Vietnam era servicemembers. As a result, VA established an agreement with
Prudential Financial to administer its policies. When first enacted, the SGLI program provided up
to $10,000 in coverage for policyholders. Today, servicemembers can receive a maximum of
$400,000 insurance coverage under the program.
On August 1, 1974, with the enactment of P.L. 93-289, VGLI became available to
servicemembers. VGLI provides for the conversion of SGLI after separation from active military
duty. VGLI is a five-year renewable term policy that, like SGLI, provides a maximum of
$400,000 of coverage.
Servicemembers may have their SGLI and VGLI proceeds paid either as a lump sum or over a
period of 36 months. Since 1999, if the member chose to have his or her benefits paid as a lump
sum without specifying that the payment be made via a single check, beneficiaries would have
received payments via retained asset accounts called Alliance Accounts. However, in light of
recent media coverage condemning this practice as a violation of contractual agreements,
Prudential is to now send beneficiaries of VA life-insurance policies a check when they ask for a
lump-sum benefit payment rather than keeping the money in an Alliance Account and mailing a
draft book, unless an Alliance Account is specifically requested. Free financial counseling is
available to SGLI and VGLI beneficiaries if the policyholder chooses to have payments made via
an Alliance Account.
During the Korean War, before SGLI and VGLI were established, Congress passed the Insurance
Act of 1951 (P.L. 82-23) and established the S-DVI program. S-DVI was created to meet the
insurance needs of certain veterans with service-connected disabilities, many of whom would not
be eligible for private life insurance due to their service-connected disabilities. Currently, policies
are issued for a maximum face value of $10,000. Retained asset accounts are not offered under
the S-DVI program.
Several bills have been introduced in the 111th Congress that would affect the VA’s current life
insurance programs: H.R. 5993, H.R. 2713, H.R. 1037, S. 3718, and S. 728.
This report provides information on the current VA life insurance programs available for
servicemembers and veterans, management and administration issues, and associated policy
issues and legislation.

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Contents
Introduction ................................................................................................................................ 1
Servicemembers’ Group Life Insurance Program......................................................................... 1
Eligibility Requirements for SGLI......................................................................................... 2
SGLI Coverage and Premium Rates ...................................................................................... 3
Full-time Coverage ......................................................................................................... 3
Part-time Coverage ......................................................................................................... 4
Beneficiaries ................................................................................................................... 4
Premium Rates................................................................................................................ 4
Extra Hazard of Duty Cost .................................................................................................... 5
Family Servicemembers’ Group Life Insurance Coverage...................................................... 6
FSGLI Spousal Coverage................................................................................................ 6
FSGLI Child Coverage ................................................................................................... 7
SGLI Traumatic Injury Protection Program ........................................................................... 8
Eligibility........................................................................................................................ 8
Benefit Amount............................................................................................................... 9
Veterans’ Group Life Insurance Program ................................................................................... 10
Eligibility Requirements for VGLI ...................................................................................... 10
VGLI Coverage and Premium Rates.................................................................................... 11
VGLI Payment of Premiums ............................................................................................... 12
VGLI Coverage Reduction Schedule............................................................................. 13
Commercial Conversion Criteria ......................................................................................... 13
Service-Disabled Veterans’ Insurance Program.......................................................................... 13
Eligibility Requirements for S-DVI (“RH”)......................................................................... 14
S-DVI Premiums and Disability Provisions ......................................................................... 15
Eligibility Requirements for Supplemental S-DVI (“Supplemental RH”)....................... 16
Gratuitous S-DVI (“ARH”) ................................................................................................. 16
Eligibility Requirements for Gratuitous S-DVI.............................................................. 17
Management and Administration............................................................................................... 17
How Policy Proceeds are Paid Out: Alliance Account.......................................................... 18
Accelerated Benefit Option ........................................................................................... 19
Financial Counseling........................................................................................................... 19
Policy Issues ............................................................................................................................. 20
Lack of Transparency for SGLI and VGLI Policyholders..................................................... 20
Coverage Limit for S-DVI................................................................................................... 21

Tables
Table 1. Monthly SGLI Premiums ............................................................................................... 5
Table 2. Monthly Premium Rates for SGLI Spousal Coverage..................................................... 6
Table 3. VGLI Monthly Premium Rates .................................................................................... 11
Table 4. VGLI Premium Payment Options................................................................................. 12
Table 5. VGLI Coverage Reduction Schedule............................................................................ 13
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Table 6. S-DVI Current Coverage Information .......................................................................... 14

Contacts
Author Contact Information ...................................................................................................... 22
Acknowledgments .................................................................................................................... 22

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Introduction
The Department of Veterans Affairs (VA) has administered and supervised several life insurance
programs for servicemembers and veterans since 1919. Currently, three VA life insurance
programs that provide benefits to the families of servicemembers and veterans are still enrolling
new policyholders. These programs are Servicemembers’ Group Life Insurance (SGLI), Veterans’
Group Life Insurance (VGLI), and Service-Disabled Veterans’ Insurance (S-DVI). The VA’s
Regional Office and Insurance Center (VAROIC) in Philadelphia, PA, supervises SGLI and
VGLI, but the day-to-day administration of the programs is handled by the Office of
Servicemembers’ Group Life Insurance (OSGLI), a division of the Prudential Insurance Company
of America. The Service-Disabled Veterans’ Insurance (S-DVI) program, on the other hand, is
administered entirely by the VA. Access to VA-administered life insurance programs gives
servicemembers and veterans, who may not be eligible for private life insurance policies, the
opportunity to carry group life insurance. This provides for their families in the event of the
servicemember’s or veteran’s death.
The VA agreed in September 2009 to allow Prudential Financial to provide payments of lump-
sum benefits through Prudential’s Alliance Accounts (a retained asset account) unless the
beneficiary elects a single check.1 Recent media coverage on the issue has caused the VA to
revamp its claims materials, to create more transparency for SGLI and VGLI beneficiaries, and to
require payments of lump-sum benefits through a single check unless the beneficiary elects to use
an Alliance Account.2 Additionally, concerns have been raised about the limited amount of
coverage offered to S-DVI policyholders, which is capped at $10,000.
This report is structured into three major sections. The first section provides an overview of the
VA’s different life insurance programs, including eligibility requirements, premium rates, and
benefits. The second section describes the VA’s management and administrative structure as well
as how policy proceeds to beneficiaries are currently paid out for SGLI, VGLI, and S-DVI. The
third section of the report discusses major areas of congressional interest and policy issues as they
pertain to SGLI, VGLI, and S-DVI.
Servicemembers’ Group Life Insurance Program
In September 1965, Congress established the Servicemembers’ Group Life Insurance (SGLI)
program (P.L. 89-214) by mandating the VA to enter into an agreement with the private insurance
industry to meet the insurance needs of Vietnam era servicemembers.3 Since 1965, Congress has
amended SGLI to include all eligible servicemembers in the uniformed service.

1 A retained asset account is a bank account established in the beneficiary’s name that provides the insurer with a
means to retain (withhold) assets for investment purposes. Beneficiaries receive a personalized draft book which they
can use to withdraw funds from the retained asset account for up to the full amount of benefits available.
2 Department of Veterans Affairs, “VA Continues to Ensure and Protect Servicemembers’, Survivors’ Life Insurance
Benefits,” press release, September 14, 2010, http://www1.va.gov/opa/pressrel/pressrelease.cfm?id=1956.
3 The term “servicemember” refers to a person on active duty, active duty for training, or inactive duty training in the
uniformed services in a commissioned, warrant, or enlisted rank, or grade, or as a cadet or midshipman of the United
States Military Academy, United States Naval Academy, United States Air Force Academy, or the United States Coast
Guard Academy.
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The SGLI program, through a group policy issued by the Prudential Insurance Company of
America, provides low-cost term insurance protection to servicemembers. It is administered by
the Department of Veterans Affairs Regional Office and Insurance Center’s (VAROIC’s) Office of
Servicemembers’ Group Life Insurance (OSGLI) located in Philadelphia, PA. When first enacted,
the SGLI program provided up to $10,000 coverage for members. Today, all servicemembers can
receive a maximum of $400,000 insurance coverage under the program. As of January 2010,
about 2,402,500 members of the uniformed service were covered under the program.4
Under the Veterans’ Survivor Benefits Improvement Act of 2001 (P.L. 107-14), Congress
extended coverage to the spouses and children of servicemembers covered under the SGLI
program. The FY2005 Emergency Supplemental Appropriations Act for Defense, the Global War
on Terror, and Tsunami Relief (P.L. 109-13) added Traumatic Injury Protection Insurance to
SGLI, which extended the program to provide short-term financial assistance to servicemembers
suffering from traumatic injuries.5
Eligibility Requirements for SGLI
Full-time and part-time life insurance coverage are both provided through the SGLI program.6
According to the Servicemembers’ and Veterans’ Group Life Insurance Handbook, full-time
coverage is provided to the following active duty servicemembers under calls or orders that
exceed 30 days:
• commissioned, warrant, and enlisted members of the Army, Navy, Air Force,
Marine Corps, Coast Guard, National Oceanic and Atmospheric Administration
(NOAA) Commissioned Corps, and Public Health Service (PHS) Commissioned
Corps;
• members of a uniformed service’s Ready Reserve/National Guard that are
assigned to a unit or position in which they may be required to perform active
duty or active duty for training and are scheduled to perform at least 12 periods
of inactive duty training annually that is creditable for retirement purpose under
Title 10 of the U.S. Code;7
• members of the Individual Ready Reserve (IRR) who volunteer for assignment to
a “mobilization” category under Sec. 12304 (i)(1) of Title 10 of the U.S. Code;
• cadets or midshipmen of the U.S. Military Academy, U.S. Naval Academy, U.S.
Air Force Academy, and the U.S. Coast Guard Academy; and
• Reserve Officers’ Training Corps (ROTC) members, cadets, or midshipmen
while attending field training or practice cruises.8

4 Department of Veterans Affairs, Regional Office and Insurance Center, VA Life Insurance Programs for Veterans and
Servicemembers,
Philadelphia, PA, January 2010, p. 31, http://www.insurance.va.gov/gli/glihandbook/
glibooklet2010.pdf.
5 Traumatic Injuries are discussed further in the text under the heading “SGLI Traumatic Injury Protection Program.”
Also, see 38 C.F.R. § 9.20 for more information on Traumatic Injuries.
6 “Full-time” or “Part-time” coverage depends on level of active military service.
7 Title 10 of the U.S. Code includes laws relating to the U.S. Armed Forces.
8 Department of Veterans Affairs, Servicemembers’ and Veterans’ Group Life Insurance Handbook, H-29-98-1,
Washington, DC, August 2009, p. 6, http://www.insurance.va.gov/sgliSite/handbook/handbook.pdf.
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The following members of the Reserves (who are ineligible for full-time coverage) are eligible
for part-time coverage while on active duty under calls or orders that exceed 30 days:
• commissioned, warrant, and enlisted members of the Army, Navy, Air Force,
Marine Corps, and Coast Guard Reserves (except temporary members of the
Coast Guard Reserve);
• members of the IRR during one-day call-ups;
• PHS Reserve Corps;
• Army National Guard and Air National Guard while performing duty under
Sections 316, 502, 503, 504, or 505 of Title 32 of the U.S. Code;9 and
• ROTC members, cadets, and midshipmen while attending field training or
practice cruises.10
SGLI Coverage and Premium Rates
Currently, the maximum SGLI coverage is $400,000.11 This coverage amount ($400,000) is
automatic when the servicemember enters into a period of active duty or reserve status and can be
elected in $50,000 decrements from the maximum amount. Members may elect to either decline
coverage or reduce coverage by completing SGLI program Form SGLV-8286.12 However, proof
of good health is required13 if the member decides to obtain or increase coverage after he or she
had previously chosen to reduce or decline coverage.14
This insurance is forfeited when an insured servicemember is found guilty of mutiny, treason,
spying, desertion, or, as a conscientious objector, refuses to perform service or refuses to wear his
or her uniform.15
Full-time Coverage
Servicemembers who are eligible for full-time SGLI coverage are covered through their period of
active duty or qualifying reserve status. They are also covered for a period of 120 days (with no
premium) after their separation or release from active duty or reserve status.16
The Veterans’ Housing Opportunity and Benefits Improvement Act of 2006 (P.L. 109-233)
extended the free 120-day coverage period to two years for certain disabled servicemembers and
their dependents. This change allows SGLI policyholders that are totally disabled (unable to
work) at the time of their separation or release from service to keep their SGLI coverage for up to

9 Title 32 of the U.S. Code includes laws relating to the National Guard.
10 Department of Veterans Affairs, Servicemembers’ and Veterans’ Group Life Insurance Handbook, H-29-98-1,
Washington, DC, August 2009, pp. 6-7, http://www.insurance.va.gov/sgliSite/handbook/handbook.pdf.
11 The most recent change to SGLI maximum coverage amount was made on September 1, 2005.
12 This form can be found on the VA Website at https://www.insurance.va.gov/sgliSite/converting/FSGLI.htm.
13 “Proof of good health” shall be submitted at the applicant’s own expense (38 U.S.C. § 1977(g)).
14 38 U.S.C. § 1967(c).
15 38 U.S.C. § 1973.
16 38 U.S.C. § 1967, and § 1968.
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two years. This coverage is classified as the SGLI Disability Extension, and the member is
obligated to apply for the coverage after he or she has separated from service.17
When a servicemember with full-time SGLI coverage is released from active duty or the
Reserves, he or she may convert his or her coverage to VGLI or to a commercial life insurance
policy with any of the 38 participating commercial insurance companies.18
Part-time Coverage
Servicemembers eligible for part-time SGLI coverage are only covered during the time in which
they are on active duty or active duty for training, and the period in which they are traveling to
and from such duty. Part-time coverage members are eligible for the free 120-day period of
coverage only if they incur a disability or a preexisting disability is aggravated during a period of
duty.19
Beneficiaries
Servicemembers can select anyone as the beneficiary of their insurance policies. If a member fails
to name someone, the insurance proceeds, by law, must be distributed in the following order:
1. widow or widower, or, if none,
2. children (not including stepchildren), or, if none,
3. parents, or, if none,
4. executor of the estate, or, if none,
5. other next of kin.20
If the servicemember chooses not to be insured under the SGLI program, chooses to be insured
for less than the SGLI maximum amount, or names someone other than his or her spouse or child
as the beneficiary, the law requires that the spouse of the servicemember must be notified by the
uniformed service.21
Premium Rates
The cost of SGLI is generally shared by the servicemember and the government. Each
servicemember is responsible for paying a monthly premium (unless in a combat zone, in which
case the government pays the full premium), and the government and Prudential pay the cost of
all death claims. The SGLI insurance premium is deducted from the servicemember’s pay. The

17 Department of Veterans Affairs, Servicemembers’ and Veterans’ Group Life Insurance Handbook, H-29-98-1,
Washington, DC, August 2009, p. 8, http://www.insurance.va.gov/sgliSite/handbook/handbook.pdf.
18 Department of Veterans Affairs, Regional Office and Insurance Center, VA Life Insurance Programs for Veterans
and Servicemembers,
Philadelphia, PA, January 2010, p. 33, http://www.insurance.va.gov/gli/glihandbook/
glibooklet2010.pdf. Also, a list of participating companies is available at http://www.insurance.va.gov/sgliSite/forms/
sgl133ed07-10.pdf.
19 38 U.S.C. § 1967-1968.
20 38 U.S.C. § 1970(a).
21 38 U.S.C. § 1967(f). Also 38 C.F.R. § 9.40
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premium rates are mutually agreed upon by the VA and the contractor (Prudential Insurance
Company of America).
Currently, the basic SGLI premium rate decreased from the 2007 rate of 7.0 cents per month per
$1,000 of coverage, to 6.5 cents per month per $1,000 of coverage.22 Table 1 shows premium
rates for both full-time and part-time active duty servicemembers and reservists:23
Table 1. Monthly SGLI Premiums
Amount of Insurance
Monthly SGLI Premium
$50,000
$3.25
$100,000 $6.50
$150,000 $9.75
$200,000 $13.00
$250,000 $16.25
$300,000 $19.50
$350,000 $22.75
$400,000 $26.00
Source: Department of Veterans Affairs, Regional Office and Insurance Center, VA Life Insurance Programs for
Veterans and Servicemembers, Philadelphia, PA, January 2010.
Note: These premiums do not include the $1.00 premium for Traumatic Servicemembers’ Group Life Insurance
(TSGLI) coverage. Full-time servicemembers are charged one of the above premiums once monthly. Part-time
servicemembers are charged one of the above premiums once annually.
Extra Hazard of Duty Cost
Each branch of service is liable, under law, to pay the additional cost of claims due to the extra
hazards of serving in the military.24 In 2009, extra hazard costs amounted to $213 million. This
amount is determined by the VA and paid by the Department of Defense (DOD) on behalf of the
uniformed service.25
Each year the VA actuaries study the mortality rate of the most recent three years of
servicemembers’ claim experience. This allows them to develop the average death rate by age.
The rate is used to determine the expected number of death claims. At the end of each policy year,
the expected death claims are compared with the actual number of incurred death claims. If the

22 The most recent change to SGLI premium rates was made on July 1, 2008.
23 Department of Veterans Affairs, Regional Office and Insurance Center, VA Life Insurance Programs for Veterans
and Servicemembers,
Philadelphia, PA, January 2010, p. 31, http://www.insurance.va.gov/gli/glihandbook/
glibooklet2010.pdf.
24 The term “extra hazards” refers to the amount of additional monies required to pay death claims that exceed those
that would be incurred under normal peacetime conditions.
25 Department of Veterans Affairs, Regional Office and Insurance Center, Servicemembers’ and Veterans’ Group Life
Insurance Programs: Forty-Fourth Annual Report,
Philadelphia, PA, June 2009, pp. 6-7,
https://www.insurance.va.gov/sgliSite/miscellaneous/SGLI-Ann-Report-2009.pdf.
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actual death claims exceed the estimated death claims, the excess claims are multiplied by the
average amount of insurance per member to determine the extra hazard cost for each uniformed
service.
If the annual extra hazard cost paid is lower than the estimated amount, Prudential Insurance will
refund the excess funds to the VA. Excess funds are deposited into the revolving fund. If the extra
hazard cost paid exceeds the annual estimated amount, then the VA is responsible for reimbursing
the insurance company (Prudential) from the revolving fund.26
Family Servicemembers’ Group Life Insurance Coverage
SGLI coverage was extended to the spouses and dependent children of insured servicemembers
by the Veterans’ Survivor Benefits Improvements Act of 2001 (P.L. 107-14).
Family Servicemembers’ Group Life Insurance (FSGLI) coverage is automatically issued to the
member’s spouse and children, based on the information in the servicemember’s personnel
records. Members may decline family coverage or may elect reduced coverage by completing
SGLI program Form SGLV-8286A, Family Coverage Election.27 However, proof of good health
of the spouse or child is required if the member decides to obtain or increase coverage for his or
her spouse or child after he or she has previously chosen to reduce or decline coverage.28
FSGLI Spousal Coverage
Spouses of servicemembers on active duty or reservists, including National Guard members
eligible for full-time SGLI coverage, can be insured up to the maximum amount of $100,000 in
increments of $10,000. However, spousal coverage cannot exceed the servicemember’s SGLI
coverage. Premiums for spousal coverage are deducted from the servicemember’s or reservist’s
pay.29 Table 2 shows the premium rates for spouses based on age and amount of coverage.30
Table 2. Monthly Premium Rates for SGLI Spousal Coverage
Age of Spouse
Amount of
Under
Age 35 to
Age 40 to
Age 45 to
Age 50 to
Age 55 to
Age 60
Insurance
Age 35
39
44
49
54
59
and Over
$100,000 5.50 7.00 9.00 14.00 27.00 40.00 52.00
$90,000 4.95 6.30 8.10 12.60 24.30 36.00 46.80
$80,000 4.40 5.60 7.20 11.20 21.60 32.00 41.60

26 38 U.S.C. § 1969.
27 This form can be found on the VA Website at https://www.insurance.va.gov/sgliSite/converting/FSGLI.htm.
28 Department of Veterans Affairs, Servicemembers’ and Veterans’ Group Life Insurance Handbook, H-29-98-1
Washington, DC, August 2009, p. 36, http://www.insurance.va.gov/sgliSite/handbook/handbook.pdf.
29 Department of Veterans Affairs, Servicemembers’ and Veterans’ Group Life Insurance Handbook, H-29-98-1
Washington, DC, August 2009, pp. 34-37, http://www.insurance.va.gov/sgliSite/handbook/handbook.pdf.
30 Department of Veterans Affairs, Regional Office and Insurance Center, Servicemembers’ and Veterans’ Group Life
Insurance Programs: Forty-Fourth Annual Report,
Philadelphia, PA, June 2009, p. 4, https://www.insurance.va.gov/
sgliSite/miscellaneous/SGLI-Ann-Report-2009.pdf.
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Age of Spouse
Amount of
Under
Age 35 to
Age 40 to
Age 45 to
Age 50 to
Age 55 to
Age 60
Insurance
Age 35
39
44
49
54
59
and Over
$70,000 3.85 4.90 6.30 9.80 18.90 28.00 36.40
$60,000 3.30 4.20 5.40 8.40 16.20 24.00 31.40
$50,000 2.75 3.50 4.50 7.00 13.50 20.00 26.00
$40,000 2.20 2.80 3.60 5.60 10.80 16.00 20.80
$30,000 1.65 2.10 2.70 4.20 8.10 12.00 15.60
$20,000 1.10 1.40 1.80 2.80 5.40 8.00 10.40
$10,000 0.55 0.70 0.90 1.40 2.70 4.00 5.20
Source: Department of Veterans Affairs, Regional Office and Insurance Center, VA Life Insurance Programs for
Veterans and Servicemembers, Philadelphia, PA, January 2010.
Notes: Spouses of servicemembers can receive coverage up to $100,000. However, the spouse’s coverage
amount can never exceed that of the servicemember’s coverage amount. For example, if the servicemember has
$70,000 of SGLI coverage, the spouse’s coverage can be a maximum of $70,000 (Department of Veterans Affairs,
Regional Office and Insurance Center, VA Life Insurance Programs for Veterans and Servicemembers, Philadelphia, PA,
January 2010, p. 36, http://www.insurance.va.gov/gli/glihandbook/glibooklet2010.pdf.
A spouse of a servicemember or active duty reservist may convert his or her coverage to a
commercial life insurance policy with any of 38 participating commercial insurance companies.
Coverage for a spouse will end 120 days after any of the following events:
• The date the servicemember elects (in writing) to terminate his or her spouse’s
coverage;
• The date the servicemember elects (in writing) to terminate his or her own SGLI
coverage;
• The date of the servicemember’s death;
• The date the servicemember separates from service; or
• The date of the servicemember’s divorce from his or her spouse.31
FSGLI Child Coverage
A child is considered to be a dependent of a servicemember if the child is unmarried and under
the age of 18, or became permanently incapable of self-support before the age of 18. Dependent
children include all natural born children, legally adopted children, and stepchildren who are
under the care of the servicemember. A child is also considered to be a dependent if he or she is
between the ages of 18 and 22 and is enrolled in an approved educational institution. Dependent
children covered under an active duty servicemember’s or reservist’s SGLI policy are insured at
the maximum amount of $10,000 each (at no cost to the servicemember). The child is covered up
to 120 days after the servicemember has separated from service.32

31 Ibid., p. 38.
32 Ibid., pp. 36-38.
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The Veterans’ Benefits Improvement Act of 2008 (P.L. 110-389) added benefits for families of
stillborn children born on or after October 10, 2008, under the FSGLI program. Previously,
stillborn children were excluded from coverage. Servicemembers who experience the death of
such a dependent child are eligible to receive a $10,000 payment (the maximum amount under
FSGLI child coverage).
Coverage for a child will end 120 days after the servicemember’s separation or release from
service or assignment (in the case of Ready Reserve). There are currently no conversion options
for children.
SGLI Traumatic Injury Protection Program
Since its inception in 2005, the Traumatic Servicemembers’ Group Life Insurance (TSGLI)
program has provided short-term financial assistance to servicemembers who suffer from
traumatic injuries while on active duty.33 TSGLI is an automatic coverage program under the
SGLI program, and its purpose is to ease the burden for servicemembers and their families during
times of extensive recovery and rehabilitation. In 2008, after an extensive “TSGLI Year-One
Review,” the VA increased the number of traumatic injuries covered under this program and
relaxed the criteria for other injuries.34
Eligibility
Servicemembers who are covered under the SGLI program are automatically covered by the
TSGLI program. However, TSGLI does not cover spouses and children who are covered under
the SGLI program, nor does it cover those under the VGLI program. Eligibility and certification
for payment are determined and provided by each member’s uniformed service.35
Losses covered by TSGLI include the following conditions:
• total and permanent loss of sight, speech, or hearing;
• amputation of hand or the loss of four fingers on the same hand or loss of a
thumb;
• amputation of foot or loss of all toes;
• loss of four toes on the same foot or the loss of the big toe;
• limb salvage;
• quadriplegia, paraplegia, hemiplegia, or uniplegia;
• burns (2nd degree or more covering 20% or more of the body or 20% or more of
the face);

33 Department of Veterans Affairs, Regional Office and Insurance Center, VA Life Insurance Programs for Veterans
and Servicemembers,
Philadelphia, PA, January 2010, pp. 34-35, http://www.insurance.va.gov/gli/glihandbook/
glibooklet2010.pdf. Also 38 U.S.C. § 9.20.
34 Ibid., p. 34.
35 Department of Veterans Affairs, Servicemembers’ and Veterans’ Group Life Insurance Handbook, H-29-98-1
Washington, DC, August 2009, pp. 42-43, http://www.insurance.va.gov/sgliSite/handbook/handbook.pdf.
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• facial reconstruction;
• coma resulting from traumatic injury;
• inability to perform two activities of daily living due to traumatic brain injury;36
• inability to perform two activities of daily living due to other traumatic injury;
and
• continuous 15-day inpatient hospital care due to traumatic injury.37
The Veterans’ Benefits Act of 2010 (P.L. 111-275) provided that the Secretary may distinguish in
payments for qualifying loss of a dominant hand and qualifying loss of a non-dominant hand.
Losses Excluded From TSGLI Payment
Injuries sustained while committing or attempting to commit a felony and losses caused by the
following are excluded from TSGLI payment:
• mental disorder;
• mental or physical illness or disease, unless the illness or disease is caused by a
pyogenic (pus forming, often from a wound) infection, biological, chemical, or
radiological weapon, or accidental ingestion of a contaminated substance;
• attempted suicide;
• self-inflicted wounds;
• diagnostic procedures, preventive medical procedures (i.e., inoculations), medical
or surgical treatment for an illness or disease, or any complications arising from
such procedures or treatment; or
• the member’s willful use of illegal or controlled substances, unless they are
administered or taken on the advice of medical professionals.38
Benefit Amount
TSGLI benefit amounts depend on the type and severity of a servicemember’s injury and range
from $25,000 to a maximum of $100,000. Servicemembers who suffered injuries between
October 7, 2001, and December 1, 2005, as a result of serving in Operation Enduring Freedom or
Operation Iraqi Freedom (whether insured by SGLI or not) may receive retroactive TSGLI
benefits.39

36 The phrase “inability to perform two activities of daily living” means the inability to independently perform two or
more of the following six functions: Bathing, continence, dressing, eating, toileting, or transferring.
37 Department of Veterans Affairs, Regional Office and Insurance Center, VA Life Insurance Programs for Veterans
and Servicemembers,
Philadelphia, PA, January 2010, p. 35, http://www.insurance.va.gov/gli/glihandbook/
glibooklet2010.pdf.
38 Ibid.
39 Ibid., p. 34.
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TSGLI premiums are $1.00 per month and are deducted from the servicemember’s pay.40
Veterans’ Group Life Insurance Program
On August 1, 1974, Veterans’ Group Life Insurance (VGLI) became available to former
servicemembers (P.L. 93-289). VGLI provides for the conversion of SGLI after separation from
active duty. The administration of the VGLI program is handled by the OSGLI, a division of the
Prudential Insurance Company of America. VGLI is a five-year renewable term policy which
provides a maximum of $400,000 of coverage. VGLI policyholders have the right to renew their
coverage at the end of each five-year term period. Policyholders may also convert VGLI to an
individual commercial policy at any time with any of the 38 participating private companies
without proof of insurability.41 VGLI has no cash, loan, paid up, or extended values and does not
pay dividends.
Eligibility Requirements for VGLI
Veterans eligible for the VGLI program are
• Ready Reserves/National Guard SGLI policyholders who are separated, retired,
or released from assignment;
• insured SGLI members who are being released from active duty or active duty
for training under a call or order to duty that does not specify a period of less
than 31 days;
• Ready Reservists who have part-time SGLI coverage and who, while performing
duty (or traveling directly to or from duty), suffer an injury or disability that
causes them to be uninsurable at standard premium rates;42 and
• people assigned to the IRR of a military service or to the Inactive National Guard
(ING). This includes members of the Public Health Service Inactive Reserve
Corps (IRC).43
After separation from service, members have 120 days to apply for VGLI without providing
evidence of insurability (good health). Members who do not apply for VGLI within 120 days of
separation from service have an additional year in which to apply for VGLI. During this
additional year members are required to submit the initial premium and provide evidence of
insurability (good health) in addition to the application for VGLI. If a member does not apply for
VGLI within the one year and 120 days allotted following separation from service, he or she
becomes ineligible for coverage under VGLI.

40 TSGLI is not an optional program.
41 A list of participating companies is available at http://www.insurance.va.gov/sgliSite/forms/sgl133ed07-10.pdf.
42 Members who join the Ready Reserves/National Guard after release from active duty are eligible to continue their
SGLI coverage for as long as they remain in the Ready Reserves/National Guard. They are also eligible to convert their
active duty SGLI coverage to VGLI coverage.
43 Department of Veterans Affairs, Servicemembers and Veterans Group Life Insurance Handbook, H-29-98-1,
Washington, DC, August 2009, p. 47, http://www.insurance.va.gov/sgliSite/handbook/handbook.pdf.
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Members who are totally disabled44 at the time of separation from active duty and are granted a
free two-year extended SGLI coverage period are automatically enrolled in VGLI at the end of
the two-year extension period.45
VGLI Coverage and Premium Rates
The maximum amount of coverage for VGLI is $400,000 if the member separated from service
after September 1, 2005. If the member separated from service prior to September 1, 2005, his or
her maximum coverage is $250,000 (P.L. 109-80). VGLI coverage is issued in multiples of
$10,000 up to the maximum amount of coverage. VGLI coverage, at the time of conversion from
SGLI, may not exceed the amount of SGLI coverage that the member had at the time he or she
was released from active duty or the reserves. However, a member may increase his or her
coverage once in every five-year period by $25,000 if the member is under the age of 60, and still
to the statutory maximum coverage amount.46 To be covered under VGLI, members must pay
premiums. VGLI premium rates are determined by age and amount of insurance. For example, a
member who is aged 29 or younger would pay $32 per month for the maximum $400,000
coverage, while a member who is aged 75 or older would pay $1,800 per month for the same
$400,000 coverage.47 Table 3 lists monthly premium rates per age group per coverage amount.
Table 3. VGLI Monthly Premium Rates
Amount of Insurance
Age
$400,000 $300,000 $200,000 $100,000 $50,000 $10,000
Thru
29 $32.00 $24.00 $16.00 $8.00 $4.00 $0.80
30
thru
34
40.00 30.00 20.00 10.00 5.00 1.00
35
thru
39
52.00 39.00 26.00 13.00 6.50 1.30
40
thru
44
68.00 51.00 34.00 17.00 8.50 1.70
45
thru
49
88.00 66.00 44.00 22.00 11.00 2.20
50 thru 54
144.00
108.00
72.00
36.00
18.00
3.60
55
thru
59
268.00 201.00 134.00 67.00 33.50 6.70
60
thru
64
432.00 324.00 216.00 108.00 54.00 10.80
65
thru
69
600.00 450.00 300.00 150.00 75.00 15.00

44 Any impairment of mind or body which continuously renders it impossible for the insured to follow any substantially
gainful occupation; the permanent loss or loss of use of both feet, or both hands, or both eyes, or one foot and one hand,
or one hand and one eye; the total loss of hearing in both ears; or the organic loss of speech. Veterans having any of the
before mentioned disabilities are considered totally disabled regardless of employment. Members having other
disabilities are considered totally disabled only when the disability would prevent the member from engaging in
substantially gainful employment.
45 The two-year period for conversion from SGLI to VGLI for disabled servicemembers was made permanent by the
Veterans’ Benefits Act of 2010 (P.L. 111-275) and is effective for separations from service after June 14, 2005.
46 The first five-year period begins on the one-year anniversary of the date the member becomes insured under VGLI.
47 Department of Veterans Affairs, Regional Office and Insurance Center, VA Life Insurance Programs for Veterans
and Servicemembers
, Philadelphia, PA, January 2010, p. 42, https://www.insurance.va.gov/gli/glihandbook/
glibooklet2010.pdf.
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Amount of Insurance
Age
$400,000 $300,000 $200,000 $100,000 $50,000 $10,000
70
thru
74
900.00 675.00 450.00 225.00 112.50 22.50
75 & Over
1,800.00
1,350.00
900.00
450.00
225.00
45.00
Source: Department of Veterans Affairs, Regional Office and Insurance Center, VA Life Insurance Programs for
Veterans and Servicemembers, Philadelphia, PA, January 2010, p. 42, https://www.insurance.va.gov/gli/glihandbook/
glibooklet2010.pdf.
VGLI Payment of Premiums
The VGLI program offers various options for paying premiums. Policyholders may choose to pay
the premiums on a monthly, quarterly, semi-annual, or annual basis. Discounted premiums are
available for some of these options. Table 4 shows the different payment options available under
VGLI and their associated discounts.
Table 4. VGLI Premium Payment Options
Frequency of Premium
Methods of Premium Payment
Payment
Available
Annual Premium Discount Rate
Monthly
Allotment from military pay
Deduction from VA compensation
payments
No Discount
Check
On-demand deduction from checking
account or credit card account
Quarterly
Check
2.50% Discount
On-demand deduction from checking
account or credit card account
Semi-annual y
Check
3.75% Discount
On-demand deduction from checking
account or credit card account
Annual y
Check
5.00% Discount
On-demand deduction from checking
account or credit card account
Source: Department of Veterans Affairs, Regional Office and Insurance Center, VA Life Insurance Programs for
Veterans and Servicemembers, Philadelphia, PA, January 2010, p. 42, https://www.insurance.va.gov/gli/glihandbook/
glibooklet2010.pdf.
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VGLI Coverage Reduction Schedule
As members age, they incur higher premium rates for insurance coverage, as shown in Table 5.
To lessen or maintain cost at older ages, members may gradually reduce the amount of their
VGLI coverage. VA recommends the following schedule that will allow veterans to maintain
level premiums ($225 per month) while reducing coverage at ages 65 and older:
Table 5. VGLI Coverage Reduction Schedule
Age Group
Coverage Level
Monthly Premium
65-69 $150,000 $225
70-74 $100,000 $225
75 & over
$50,000
$225
Source: Department of Veterans Affairs, Regional Office and Insurance Center, VA Life Insurance Programs for
Veterans and Servicemembers, Philadelphia, PA, January 2010, p. 43, https://www.insurance.va.gov/gli/glihandbook/
glibooklet2010.pdf.
Commercial Conversion Criteria
VGLI policyholders may convert to individual commercial policies at any time with a
commercial company that participates in the program without proof of insurability so long as
VGLI premiums are paid up to the date of the conversion.48 However, once a member converts
his or her coverage to a commercial policy he or she may no longer renew his or her VGLI
coverage. Veterans that convert to commercial policies are issued standard premium rates
regardless of their health, but coverage may not exceed the amount of VGLI coverage that the
members had at the time of conversion. Additionally, the conversion policy must be a permanent
policy, such as a whole life policy. Other types of policies, such as term, variable life, or universal
life insurance, are not allowed as conversion policies. Spouses and children may not be covered
under VGLI.
In order to convert a VGLI policy, the veteran must:
• Select a company from the participating companies listing;
• Submit an application to the local sales office of the company selected;
• Obtain a letter from the OSGLI verifying coverage; and
• Give a copy of that notice to the agent who takes the application.
Service-Disabled Veterans’ Insurance Program
During the Korean War, Congress passed the Insurance Act of 1951 (P.L. 82-23) and established
the Service-Disabled Veterans’ Insurance (S-DVI) program, which is administered entirely by the

48 A list of participating companies is available at http://www.insurance.va.gov/sgliSite/forms/sgl133ed07-10.pdf.
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VA. S-DVI was created to meet the insurance needs of certain veterans with service-connected
disabilities, many of whom would not be eligible for private life insurance due to their service-
connected disabilities.49 S-DVI is available as a permanent plan or as a five-year term policy for
disabled veterans, and policyholders can apply for up to $10,000 in coverage. Policies for this
insurance are issued with the letters “RH” in front of the policy number. RH insurance is
considered nonparticipating, which means that no dividends are paid to policyholders. S-DVI is
still being issued to new policyholders, and it is currently the only issue of direct VA life
insurance for veterans that is open to new policyholders.50 Table 6 shows basic statistics related
to S-DVI, including the current number of veterans covered and the average age of covered
veterans.
Table 6. S-DVI Current Coverage Information
Number of veterans with 5-year term policies
59,183
Number of veterans with permanent plan policies
115,718
Total amount of insurance in force
$2,053,528,077a
Average coverage per veteran
$11,741
Average age of covered veteran
60.5
Average annual death rate
35.5 per 1,000
Total disbursements FY2009
125,321,271
Percentage of policies on premium waivers
46%
Source: Department of Veterans Affairs, Regional Office and Insurance Center, VA Life Insurance Programs for
Veterans and Servicemembers, Philadelphia, PA, January 2010, p. 26, https://www.insurance.va.gov/gli/glihandbook/
glibooklet2010.pdf.
Note: Veterans may choose either a five-year term policy or a permanent plan policy when applying for S-DVI.
a. This number includes both S-DVI policies with coverage of $10,000 and S-DVI policies with coverage of
$30,000 (S-DVI coverage of $10,000 plus Supplemental S-DVI coverage of $20,000).
Eligibility Requirements for S-DVI (“RH”)
To be eligible for S-DVI, a veteran must have
• been released from military service for reasons other than dishonorable discharge
or bad conduct discharge awarded at General Court-Martial;51
• been released from active duty on or after April 25, 1951;
• been rated for a service-connected disability or disabilities (even if only 0%), but
is otherwise in good health; and
• applied within two years of receiving a rating for a new service-connected
disability.52

49 38 U.S.C. § 101.
50 Barry A. Searle, “VA Service-Disabled Veterans Insurance,” American Legion Bulletin, Washington, DC, December
3, 2009, p. 1, http://www.missourilegion.org/30-09%20sdvi%20bulletin%20dec%2009%20(2).pdf.
51 If the veteran has been released for bad conduct discharge awarded at Special Court-Martial he or she may be eligible
if the administering agency determines that, for its purposes, the discharge was not under dishonorable conditions.
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Ratings for service-connected disabilities are determined by the severity of the veteran’s disability
on a scale from 0% to 100%. 0% is a valid rating and is different from no rating at all. A 0%
rating means that a service-connected disability exists, but it is not so disabling that it entitles the
veteran to compensation payments. Under S-DVI, all veterans with a service-connected disability
are eligible for coverage, no matter the rating. However, the veteran must submit an insurance
application within two years from the date that he or she is notified about the disability rating. If
the veteran does not apply within that time but service connection is later established for some
new condition, the veteran will then have two years from the date of notice of that new condition
to apply.
S-DVI Premiums and Disability Provisions
Premiums charged for S-DVI coverage are
• based on the rates that healthy people would have been charged when the
program started in 1951, and based on 1941 mortality tables; and
• waived for veterans who are totally disabled.
Because the program insures many veterans who have severe disabilities, premium payments are
insufficient to pay all claims and are supplemented yearly by congressional appropriations.
Premiums paid for S-DVI coverage increase as policyholders get older. On November 1, 2000, to
provide financial relief from high premium rates for veterans at advanced ages, “RH” term
premiums were “capped” at the age 70 renewal rate. Therefore, annual premiums for
policyholders were “capped” at $69.73 per $1,000 of coverage.53
A major issue for “RH” policyholders is that “RH” premiums are much higher than standard
commercial rates because they are based on outdated mortality (1941) tables. The following
statement was issued by Representative Joe Donnelly, concerning the VA’s current use of 1941
mortality tables to determine S-DVI premium rates:
the current mortality tables are almost 70 years old. Tables now are based on the assumption
that disabled vets die at an average age of 58, which is no longer true given today’s record.
As life expectancy has significantly improved over the past 60 years, commercial insurance
companies have used up-to-date mortality tables. The newest table in general used by the
insurance industry has premium rates roughly 50 percent lower than S-DVI rates.54
Because life expectancy has improved since the adoption of the S-DVI program, premiums based
on the higher mortality rates of 1941 no longer fulfill congressional intent to provide life
insurance to service-connected disabled veterans at standard rates. To address these concerns, it

(...continued)
52 Service-connected disabilities are evaluated according to the VA Schedule for Rating Disabilities in Title 38, Code of
Federal Regulations
, Part 4.
53 Department of Veterans Affairs, Regional Office and Insurance Center, VA Life Insurance Programs for Veterans
and Servicemembers
, Philadelphia, PA, January 2010, p. 24, http://www.insurance.va.gov/gli/glihandbook/
glibooklet2010.pdf.
54 U.S. Congress, House Committee on Veterans’ Affairs, Subcommittee on Disability Assistance and Memorial
Affairs, Legislative Hearing on H.R. 2379, H.R. 2713, H.R. 2774, and H.R. 2968, 111th Cong., 1st sess., June 24, 2009,
Serial No. 111-31 (Washington: GPO, 2010), p. 2.
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Veterans’ Benefits: Current Life Insurance Programs

has been recommended that legislation be introduced to lower S-DVI premiums by basing them
on the 2001 CSO Mortality Table (the table currently used by the National Association of
Insurance Commissioners).
Some S-DVI policyholders are eligible for premium waivers at no extra cost. To be eligible for a
premium waiver, an insured person must have a total disability that lasts six months or longer and
that starts before the age of 65. Even if the total disability started before the effective date of the
policy, a waiver can still be obtained as long as the total disability is service-connected.
Eligibility Requirements for Supplemental S-DVI (“Supplemental RH”)
The Veterans’ Benefits Act of 1992 (P.L. 102-568) made supplemental coverage accessible to S-
DVI policyholders. Veterans who are totally disabled may apply for a waiver of premiums and
additional supplemental coverage of up to $20,000. The Veterans’ Benefits Act of 2010 (P.L. 111-
275) increased the maximum coverage amount to $30,000 effective October 1, 2011. However,
premiums cannot be waived on the additional supplemental coverage. To be eligible for
Supplemental RH, policyholders must meet the following eligibility requirements:
• They are eligible for a waiver of premiums on their basic S-DVI policy due to
total disability;55
• They apply for this coverage within one year from notice of the grant of the
waiver; and
• They are under the age of 65.56
In the 17-year period from December 1992 to September 2009, VA approved 36,200 applications
for Supplemental RH.57
Gratuitous S-DVI (“ARH”)
In 1959, Congress passed legislation to protect veterans who became incompetent due to a
service-connected disability while eligible to apply for S-DVI, but who died before filing an
application. This program is known as Gratuitous S-DVI (or ARH). Gratuitous S-DVI differs
from S-DVI because it is
• issued posthumously;58
• payable to a preferred class of a veteran’s relatives; and
• payable in a lump sum.59

55 Total disability means the veteran is unable to work on his or her own at any occupation for which he or she is suited
by training, education, or experience.
56 Department of Veterans Affairs, Regional Office and Insurance Center, VA Life Insurance Programs for Veterans
and Servicemembers
, Philadelphia, PA, January 2010, p. 23, http://www.insurance.va.gov/gli/glihandbook/
glibooklet2010.pdf.
57 Ibid.
58 After death.
59Department of Veterans Affairs, Regional Office and Insurance Center, VA Life Insurance Programs for Veterans
and Servicemembers
, Philadelphia, PA, January 2010, p. 24, http://www.insurance.va.gov/gli/glihandbook/
(continued...)
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Eligibility Requirements for Gratuitous S-DVI
Gratuitous S-DVI is granted posthumously to veterans who
• met the basic eligibility requirements for S-DVI;
• did not apply for S-DVI because of continued mental incompetence due to a
service-connected disability; and
• died before a guardian was appointed or within two years of such appointment.60
Applicants must submit their applications for Gratuitous S-DVI payment within two years from
the date of the veteran’s death. But if the person making the claim is mentally or legally
incompetent when the right to apply for the benefit expires, he or she may apply within one year
after his or her incompetency ends.
Gratuitous S-DVI lets veterans’ families obtain lump-sum payments of $10,000 after the veterans’
deaths as long as the previously mentioned eligibility requirements have been met. Gratuitous S-
DVI is only payable as a lump sum and may not be paid as an annuity.
Payment of Gratuitous S-DVI is made to the following family members in the order listed below:
1. widow or widower of the insured, if living; if not
2. insured’s child or children, if living, in equal shares; if not
3. insured’s parents, if living, in equal shares.61
Management and Administration
In 1919, the VA began oversight of all servicemember life insurance programs. The VA issued
United States Government Life Insurance to WWI servicemembers (1919-1951), National
Service Life Insurance for WWII servicemembers (1940-1951), Veterans’ Special Life Insurance
for Korean War servicemembers (1951-1956), and Veterans’ Reopened Life Insurance for
disabled WWII and Korean War servicemembers (1965-1966). All of these life insurance
programs are currently closed to new issues. The only three VA life insurance programs that
provide benefits to the families of servicemembers and veterans, and that are still allowing new
issues of life insurance, are S-DVI, SGLI, and VGLI. Congress passed the Insurance Act of 1951
(P.L. 82-23) and established the S-DVI program. S-DVI was created to meet the insurance needs
of certain veterans with service-connected disabilities, many of whom would not be eligible for
private life insurance due to their service-connected disabilities. Following S-DVI, in 1965, with
the authorization of Congress (as part of establishing SGLI), the VA Administrator purchased
group life insurance and selected the Prudential Insurance Company of America to cover its
policies. In 1974, VGLI became available to former servicemembers (P.L. 93-289). VGLI
provides for the conversion of SGLI after separation from active duty.

(...continued)
glibooklet2010.pdf.
60 Ibid., p. 75.
61 Ibid.
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In 1965, the Advisory Council on Servicemembers’ Group Life Insurance was established.62
Initially, the Advisory Council is responsible for reviewing the SGLI programs and advising the
Secretary of Veterans Affairs on policy matters concerning SGLI. However, in 1974, the Advisory
Council became responsible for reviewing the VGLI program as well. The Advisory Council
consists of the following six members according to current law:
• Secretary of the Treasury as chairperson;
• Secretary of Defense;
• Secretary of Commerce;
• Secretary of Health and Human Services;
• Secretary of Homeland Security; and
• Director of the Office of Management and Budget.
The VA Regional Office and Insurance Center (VAROIC) in Philadelphia, PA, supervises the
SGLI and VGLI programs. However, the OSGLI in Roseland, NJ, a division of Prudential,
administers the day-to-day operations of SGLI and VGLI.
How Policy Proceeds are Paid Out: Alliance Account
SGLI and VGLI policyholders may choose to have their benefits paid via Alliance Accounts. The
Alliance Account is an interest-bearing retained asset account administered through the Prudential
Insurance Company of America that is similar to a checking account. Like a checking account,
proceeds are deposited in the beneficiary’s name and he or she is given a draft book, which the
beneficiary may use to write drafts for any amount up to the full amount of the proceeds.
However, unlike checks, drafts may not be used to make purchases at the point of sale. Instead,
the beneficiary must write the draft and deposit it into his or her checking account where the
money will be transferred from the beneficiary’s Alliance Account.63 According to the VA, more
than 60,000 Alliance Accounts have been opened and successfully managed since 1999.64
Servicemembers may have their SGLI and VGLI proceeds paid either as a lump sum or over a
period of 36 months. The pay-out decision can only be made by the member at the time that he or
she fills out the Servicemembers’ Group Life Insurance Election and Certificate (SGLI 8286)
Form. Since 1999, if the member chose to have his or her benefits paid as a lump sum without
specifying that the payment be made via a single check, beneficiaries would have automatically
received payments via Alliance Accounts. However, in light of recent media coverage
condemning this practice as a violation of contractual agreements, Prudential now plans to send
beneficiaries of VA life-insurance policies a check when they ask for a lump-sum benefit payment
rather than keeping the money in an Alliance Account and mailing a checkbook, unless the
policyholder specifically requests an Alliance Account.

62 38 U.S.C. § 1974.
63 Beneficiaries cannot deposit additional funds into an Alliance Account.
64 U.S. Department of Veterans Affairs, Fact Sheet: Servicemembers’ Group Life Insurance (SGLI) and Veterans
Group Life Insurance (VGLI) Programs and the Alliance Accounts Operated by the Prudential Insurance Company of
America
, August 4, 2010, p. 2.
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Alliance Accounts are not offered under the S-DVI program, which is administered entirely by
the VA. S-DVI beneficiaries may receive a lump-sum check payment or monthly payments, as
predetermined by the veteran at the time that he or she fills out the application.
Accelerated Benefit Option
SGLI or VGLI policyholders may have access to the death benefits of their policies before they
die if they exercise the Accelerated Benefit Option (ABO). This is a one-time benefit, available
only if the policyholder is deemed terminally ill. If exercised, the ABO allows the member to
receive a lump-sum payment of the insurance subject to the following:
• Terminally ill policyholders will have access of up to 50% of the face amount of
their coverage during their lifetime.
• This money will be available in increments of $5,000.
• The insured must have a medical prognosis of life expectancy of nine months or
less.65
The S-DVI program does not have an ABO.
Financial Counseling
Since October 1, 1999, the Free Financial Counseling Service (FFCS) has been available to VA
insurance program beneficiaries. FFCS is a benefit that provides personalized objective financial
counseling to SGLI, VGLI, and TSGLI66 beneficiaries at no additional charge. VA reports that the
average participation rate for FFCS is approximately 9%.
FFCS is provided by ComPsych, an outside vendor that offers financial counseling to
beneficiaries under the product name FinancialPoint. Prudential contracts with FinancialPoint,
and all counseling expenses concerning SGLI beneficiaries are charged to the SGLI program.
According to the VA, expense charges for Policy Year 2009 were approximately $249,000.67
Financial counseling is available to beneficiaries under FinancialPoint as long as they have an
Alliance Account. Beneficiaries may contact financial advisors to answer financial questions 24
hours a day, seven days a week, by calling FinancialPoint’s toll free number or by e-mail.68
According to ComPsych, FinancialPoint advisors do not sell any products to beneficiaries and
receive no commissions for their services. Beneficiaries may request targeted assistance; for
instance, help with estate planning or saving for retirement. Beneficiaries may also request a
comprehensive personalized financial plan by submitting a detailed financial questionnaire or
having a face-to-face meeting with an advisor.

65 Department of Veterans Affairs, Regional Office and Insurance Center, VA Life Insurance Programs for Veterans
and Servicemembers
, Philadelphia, PA, January 2010, p. 33, https://www.insurance.va.gov/gli/glihandbook/
glibooklet2010.pdf.
66 The TSGLI program is administered under SGLI program and provides short-term financial assistance to
servicemembers who suffer from traumatic injuries.
67 July 1, 2008 through June 30, 2009.
68 1-888-243-7351 (SGLI or VGLI) or 1-800-428-3416 (TSGLI) or fcs@FinancialPoint.com.
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Policy Issues
Lack of Transparency for SGLI and VGLI Policyholders
The VA agreed in September 2009 to allow Prudential Financial to provide payments of lump-
sum benefits through Prudential’s Alliance Accounts (a retained asset account) unless the
beneficiary elected a single check. These funds previously were withheld in Alliance Accounts
and invested by Prudential Financial. Recent media coverage has condemned this practice as
deceptive and a violation of contractual agreements established by the VA. Another concern about
Alliance Accounts is that they are not insured by the Federal Deposit Insurance Corporation
(FDIC). This may put beneficiaries at risk of losing their benefits in the event that Prudential
fails, although the state life insurance guaranty funds indicate that the accounts would be covered
by them in the event of a failure.69 Legislation has been introduced in the 111th Congress
concerning this issue. H.R. 5993 and S. 3718 were introduced to ensure that beneficiaries of
Servicemembers’ Group Life Insurance receive financial counseling and disclosure information
regarding life insurance payments, and for other purposes. H.R. 5993 was reported on September
28, 2010 (H.Rept. 111-628).
Because of the recent media coverage, the VA has been proactive, taking action to revamp its
claims materials, to create more transparency for SGLI and VGLI beneficiaries, and to require
payments of lump-sum benefits through a single check unless the beneficiary elects to use an
Alliance Account.70 To improve its existing claim forms, the VA plans to add new documents that
give beneficiaries the opportunity to choose their payment option, including a lump-sum check, a
lump-sum Alliance Account, or 36 monthly installments.71 The VA also plans to continue to
provide a full explanation of its terms up front and begin highlighting that the Alliance Accounts
are not covered by the FDIC.
Prudential has agreed to implement these adjustments, and the department plans to continue
to carefully monitor this program to ensure that Servicemembers’ and Veterans’ beneficiaries
are well-protected.72
Other actions that the VA is planning to take include
• modifying all SGLI and VGLI related information, including frequently asked
questions, website information, and handbooks in order to clearly and completely
explain all aspects of the Alliance Account and all options available to the
beneficiary;

69 Testimony of Peter Gallanis, President, National Organization of Life and Health Insurance Guaranty Associations,
before the National Association of Insurance Commissioners, Joint Working Group of the Life Insurance and Annuities
(A) Committee on the Market Conduct and Consumer Affairs (D) Committee on Retained Asset Accounts, Seattle,
WA, August 15, 2010.
70 Department of Veterans Affairs, “VA Continues to Ensure and Protect Servicemembers’, Survivors’ Life Insurance
Benefits,” press release, September 14, 2010, http://www1.va.gov/opa/pressrel/pressrelease.cfm?id=1956.
71 Under the existing setup, the option to request a check in the mail is not on the claims form.
72 Statement by Veterans Affairs Chief of Staff John R. Gingrich, Department of Veterans Affairs, “VA Continues to
Ensure and Protect Servicemembers’, Survivors’ Life Insurance Benefits,” press release, September 14, 2010,
http://www1.va.gov/opa/pressrel/pressrelease.cfm?id=1956.
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• establishing requirements for Prudential to conduct a follow-up contact with
beneficiaries whose accounts remain open after six months to confirm the
beneficiary understands the terms of the account;
• clearly designating the source of correspondence by removing the SGLI seal
from all checks, forms, and correspondence and replacing it to show that it is
from Prudential, with the subtitle of “Office of Servicemembers’ Group Life
Insurance”;
• identifying additional opportunities to encourage beneficiaries to use the free
financial counseling service; and
• improving support to Casualty Assistant Officers and Transition Assistance
Program (TAP) Personnel by helping to prepare additional training materials and
instruction in coordination with the DOD.
Coverage Limit for S-DVI
Currently, S-DVI policies are issued for a maximum face value of $10,000. This amount has not
been increased in almost six decades. The $10,000 maximum coverage was part of the S-DVI
program at its inception in 1951.73 By comparison, $10,000 in 1951 would be worth nearly
$84,000 in 2010 after adjusting for inflation. Also, policyholders are denied the opportunity to
buy additional coverage under the program.74
As of June 24, 2009, less than 4% of veterans who were eligible to participate in the program
were insured under S-DVI.75 According to a recent congressionally mandated study, the lowest
area of veteran satisfaction was “the maximum amount of S-DVI insurance coverage that
veterans were authorized to purchase.”76 Some critics say the program falls far short of delivering
the protection it was originally designed to provide. For example, Brian E. Lawrence, assistant
national legislative director of the Disabled American Veterans, said
Government life insurance programs have limited basic coverage to $10,000 since their
inception under the War Risk Insurance Act in 1917. Then, they were an excellent benefit.
More than 93 percent of military members adopted the maximum coverage of $10,000
because they knew that in the event of their death, their family members would have the
financial resources available to pay for the cost of a home and also to cover the cost of living
for a considerable amount of time. For example, Sears, Roebuck and Co. sold prefabricated
houses in the early 1900’s. Its 1920 catalogue featured 80 models, ranging in price from
$4,900 to $6,000. Obviously, $10,000 went much further in 1917 than it does in 2003.77

73 U.S. Congress, House Committee on Veterans’ Affairs, Subcommittee on Disability Assistance and Memorial
Affairs, Legislative Hearing on H.R. 2379, H.R. 2713, H.R. 2774, and H.R. 2968, 111th Cong., 1st sess., June 24, 2009,
Serial No. 111-31 (Washington: GPO, 2010), p. 5.
74 Ibid., p. 2.
75U.S. Congress, House Committee on Veterans Affairs, Subcommittee on Disability Assistance and Memorial Affairs,
Legislative Hearing on H.R. 2379, H.R. 2713, H.R. 2774, and H.R. 2968, 111th Cong., 1st sess., June 24, 2009, Serial
No. 111-31 (Washington: GPO, 2009), p. 2.
76 Department of Veterans Affairs, Program Evaluation of Benefits for Survivors of Veterans with Service-Connected
Disabilities.

77 U.S. Congress, House Committee on Veterans’ Affairs, Subcommittee on Benefits, Oversight Hearing on the
Department of Veterans Affairs Life Insurance Program
, 108th Cong., 1st sess., September 25, 2003, Serial No. 108-23
(continued...)
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According to the VA, 46% of the veterans enrolled in the S-DVI program are considered totally
disabled and are eligible for a premium waiver for their basic coverage.78 Of those who are
eligible, only 27% currently have a Supplemental S-DVI policy, which provides an additional
$20,000 in coverage.79 This means that about 12% of all S-DVI policyholders have $30,000 in
total coverage, while the remaining 88% of participants have $10,000 in total coverage. Put in
perspective, the VGLI program offers maximum coverage of $400,000. Legislation has been
introduced in the 111th Congress to change the amounts of coverage for which S-DVI participants
are eligible. S. 728, H.R. 2713, and H.R. 1037 as amended by the Senate are examples of
legislation that primarily focus on increasing the amount of coverage available to disabled
veterans and replacing the use of the outdated (1941) mortality table when determining the
premium amounts for veterans.
Additionally, because coverage for S-DVI is not wholly funded by the premiums paid by
policyholders, Congress appropriates funds to subsidize the program. These appropriations are
necessary to support veterans who are waived from paying premiums because they are totally
disabled from service-connected disabilities. Therefore, if the amount of coverage available to
veterans were to increase the appropriation allocated for the S-DVI program would also have to
increase in order to avoid facing a short fall. In FY2010, Congress appropriated approximately
$40.1 million for veterans covered under the S-DVI program.

Author Contact Information

Christine Scott

Specialist in Social Policy
cscott@crs.loc.gov, 7-7366

Acknowledgments
This report was originally written by Glenn L. Miles II and Armaad R. Morman. All questions should be
directed to the current author.


(...continued)
(Washington: GPO, 2004), p. 10, http://veterans.house.gov/hearings/schedule108/sep03/9-25-03/9-25b-03.pdf.
78 Department of Veterans Affairs, VA Life Insurance Programs for Veterans and Servicemen, Philadelphia, PA,
January 2010, p. 26, http://www.insurance.va.gov/gli/glihandbook/glibooklet2010.pdf.
79 U.S. Congress, Senate Committee on Veterans’ Affairs, Veterans Benefits Enhancement Act of 2009, report to
accompany S. 728, 111th Cong., 1st sess., September 2, 2009, S.Rept. 111-71 (Washington: GPO, 2009), p. 3.
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