Believe it or not, the VA does so much more than screw up your disability claim, help you qualify for a home loan, and give you the funds through your Post 9/11 GI Bill. In fact, depending on how you look at it, they’ll help improve your finances. Here are three ways the VA can improve your financial situation, or at least help you keep a little more money in the bank.
Table of Contents
- VA Home Loans
- Conventional Home Loans
- VA Land Loans
- VA Construction Loan
- VA Home Improvement Loan
- Work Assistance
- Life Insurance
- How the VA Supports you Financially
VA Home Loans
Everyone knows about VA home loans, and if you don’t you either haven’t been in the military or you haven’t been alive long enough. With that being said, we probably don’t have to tell you pretty much almost all veterans qualify for this benefit. What you might not know, however, is exactly what you can and cannot do with a VA loan. We’ve gone pretty in depth about the VA home loan process in previous posts, so here’s everything we’ve talked about so far in one place—for your reading convenience.
A traditional VA Home Loan comes with no down payment, which is typically the first thing that attracts the individual. Yes, you still have to pay the funding fee—unless you’re exempt—but you’ll save a lot of money in initial costs and be able to move in much sooner because you don’t have to save up 20% to make your home purchase.
Be aware, there are exemptions to a no down payment loan. For instance, in cases where your home costs more than the county’s loan limit, as set by the VA, you might have to pay the overage. If this is your second home, you could also potentially make a down payment, if the combination of the first and second home exceeds the county’s loan limit. If you were to purchase a home where the appraised value is less than the cost of the home, you’ll have to make a down payment. Your best option here is to try and get the owners to sell at a lower price or to look at buying a different house that falls within the limits. You can read more about loan limits here.
Conventional Home Loans
Conventional home loans are great, in the sense that you get to pay a lot of extra fees—that’s us being sarcastic. For real though, unlike a VA loan, they don’t come with the same benefits, the rate might be higher, you’ll have to pay a down-payment in almost all cases, and the VA can’t step in to help regulate closing costs between you and the seller. Typically your credit score has to be higher than that in a VA loan because you aren’t being backed by anyone.
Minimum Credit Score for a VA Loan
Generally speaking, the VA does not have a minimum credit score. However you’re not getting a loan through the VA, so it’s the lenders that will set your minimum. That minimum is somewhere around 620, but this will vary from lender to lender. This doesn’t mean if you have a 610 you won’t get the loan, it just means your chances aren’t as high. If you’ve been paying your bills on time for the past 12 months, you’re showing your lenders even with a bad credit score you have the ability to pay your mortgage monthly.
Debt to Income Ratio
Lenders don’t just look at your credit score—though it is important—they also look at your debt to income ratio (DTI) and include all your current bills along with your potential new mortgage payment. Lenders want to see you have money flowing in even after your bills are paid, so the amount of income you have is important as well. Meaning, having a less than stellar credit score isn’t the end-all-be-all, there’s still hope. Even if you have a history of bankruptcy you can get a VA loan. You’ll just have to work on a few things and meet your lender’s standards. Because of this, make sure you speak with a local lender who’s well versed in the VA process. Of course, make sure you do your own research as well. I’ve definitely experienced loan representatives that don’t know about some of the basic details of the VA loan process, which makes you wonder what else they might be missing—like the VA funding fee exemption for qualifying veterans—costing you extra money.
VA Funding Fee
We mentioned a funding fee earlier in this article, but haven’t really gone in depth yet. What’s important to know about this fee is, no matter what kind of loan you choose to use with the VA, you’re going to have to pay a funding fee. This is a fee that’s paid at closing. This fee can be rolled into your financing, but it will be there. This fee also increases if you buy a second home. This fee makes sure the VA can continue to offer no money down loan options for future generations. However, there are some qualifying members who are exempt from this fee.
VA Funding Fee Exemption
If you have a disability rating from the VA, you qualify for a funding fee exemption. In fact, if you decide to pay for a second home, you will be exempt from that funding fee too. You must have your rating and show proof during the purchase of your home, otherwise, you will not be exempt and will be required to pay the funding fee. You don’t even need a high disability rating, 10% is enough to qualify for this exemption.
If you want to know why a VA Loan is better than a traditional loan, click here.
VA Land Loans
There’s a lot of rumors going around about VA land loan limits. Many people out there believe you can only buy a certain amount of land. Let us assure you, this is not true. You can buy an entire farm if you wanted to. What the VA really cares about is that you aren’t buying undeveloped land, meaning you can live on it, with flowing water, a driveway, an actual house, etc.
We can’t stress this enough, the VA does not set a limit on the amount of acreage you can purchase with your VA loan. There are some websites claiming you can’t purchase more than 20 acres or even more than 5. However, coming directly from the VA, they do not set any land limits, here’s a link to that in case you’re skeptical about our claim. Personally, we can’t see anyone buying a farm with the VA limiting land to 5 acres—but hey, not all farms have to be big, right?
VA home improvement loans, which you can read more about here, and land improvement are two different things in the eyes of the VA. Meaning, there are different policies governing it and more can and can’ts to go along with it. So, another thing you can’t do with a VA loan as far as land goes, you can’t buy land you plan to improve later. This simply means, if you want to buy land, you need to have immediate plans to move onto that property. If you’re building your home on the property, you need something more than a, “one day I’ll do that” plan. Basically, you can’t buy the land and promise the VA you’ll eventually build a house.
You need to be ready to move into your home within 60 days after the purchase of your new home. However, there are circumstances in which the VA will extend your maximum move in date. For instance, if you’re within 12 months of retirement, you can purchase your home through the VA loan process and move in once you have officially retired, even though it’s more than 60 days. If your military duty or employment is preventing you from moving into your new home within those 60 days, you may also be eligible to extend your move-in date requirement. Simply talk with your VA loan lender for the details revolving around your specific situation.
So, with all that being said, no you cannot buy land with the intention of buying land only. If you want to buy land just for hunting purposes that’s a negative ghost rider. If you want to buy land for camping purposes only, again, that’s a firm no. If you want to buy land just to say you have land, yeah, that won’t fly with the VA either. But, if you want to do any of those things and live on it, in a primary residence, then that will work.
Basically, it comes down to vacant land not being allowed under the regulations of the VA. The VA won’t support your loan if you cannot immediately move into a safe and sanitary dwelling upon purchase. You’ll need running water, electricity, safe conditions and that means everything has to be up to code.
VA Construction Loan
Let’s say, however, you already have land—that did not involve a VA loan—you could use the VA to place a modular or pre-fabricated home onto your property. You also have the option of building your home on that land. Just because you didn’t utilize the VA loan to get started does not mean you can’t use it in the future, so long as the property is safe, and by the time it’s done, both livable and up to code.
Maybe building or buying a house isn’t for you. That’s okay too, you can always go the renter’s route—unless you were planning on living in your mommy’s basement forever—start with our Renter’s Guide for Service Members.
To make things simple for you, this is a short list of what you can’t do with a VA loan in regards to property:
- Buy property as an investment
- Buy property for a business
- Buy farmland you can’t reside on
Of course, this isn’t an extensive list, we’d be here all day if that was the case, and nobody wants that.
If you’re interested in building your own home with a VA Construction Loan, you can read more about the process in this awesome article we put together for you explaining all the details.
How to Start your VA Land Loan Application
Once you’re past all the rumors and you’re ready to purchase land to build your new home on, you’ll need to know and understand the VA application process when it comes to buying a piece of land. It’s actually very simple and it’s similar to the VA Home Loan process as if you were purchasing a pre-constructed home on a piece of land. Where it might get tricky will depend on what you’ll be doing with the land.
If you’re planning to build your own home, you’ll need to find a VA approved builder—not hard, they just need to apply for approval if they aren’t on the VA’s list yet—have blueprints drawn up, have a list of how long each step will take, the cost of each step, the cost of labor, and the cost of the materials being used—provided by your builder.
But, let’s say you want that farmhouse and plenty of acres to go with it. You basically want the Little House on the Prairie lifestyle—props to you—then your process might be a little different if you intend to use the property as farmland. If this is the case, yes, as stated before, you need to dwell on the property. If, you plan on using the farm as your primary means of income, however, you have to prove to the VA that you are capable and have the skillset to run your own farm. If you do not want to list your future farm as primary income, then you don’t have to worry about this step and you can simply purchase the property—and home—as a regular VA Home Loan, so long as you meet all the other qualifying factors.
If you’re ready to start your VA home loan process, start with our VA Loan Guide to help you answer some of your most pressing questions.
How much does it cost to build a home?
People often ask the question, how much does it cost to build a house? That’s not a question that can be answered easily. When you build a home, the cost is going to depend on several factors. How much is the housing market, what season is it, how much are materials right now, where do you want to build the house, will you be using top-grade materials, how big is the house going to be? If you can answer those questions, then you have to worry about the land. How much land do you want, what type of land are you looking to buy, where are you buying the land at? Buying land that’s next to the lake is much more expensive than buying uncharted land with rocks and trees so thick you couldn’t see two feet in. You also have to consider how hard it will be to break land. While untouched land may be cheaper, it’s definitely much more expensive to work with. If you pick a place up in the mountains, it’s going to be more expensive than picking a flat area that is easily accessible to construction crews and equipment.
Somehow, even with all the extra work, people still look to build their own houses, despite the cost and aggravation. Why? Rarely does a home have absolutely everything you want, down to the intricate details. You can customize your new home, and to some people, that’s worth it. Of course, if you’re not looking to build a home, you can always go through lenders like Veteran’s United, who will help get you through the VA Home Loan process without all the hassle.
Home Advisor estimates that it costs anywhere from $149,044-$430,418 to build a house in 2018. But, apparently, some people have built homes for as low as $13,000 and as high as $750,000. With a price gap like this, it’s hard to give a good estimate as to what your home’s construction would cost. But, there are also great tools, such as this cost building calculator, out there which can give you a rough estimate based on the grade of materials you plan to use, how big you’re planning on the house being, and what state and county you live in. Just remember, this doesn’t include the cost of your land. If that’s scaring you, you can always look at buying a house that’s move-in ready by talking to one of our top rated VA Home Loan providers, like Rocket Mortgage.
VA Construction Loan Lenders
After you’ve gotten a lot of estimates and decided, yes, you want to build your own home, you’ll need to find a lender. If you’ve served in the military and qualify for a VA Home Loan, you’ll also qualify for a VA Construction Loan. Lenders typically call this the 1x close VA construction loan.
Unfortunately, the Internet is filled with a lot of articles saying it’s near impossible to find a lender willing to do a 100% no money down VA construction loans. While this has some truth behind it, it’s definitely not an impossible feat. In fact, as the housing market has improved, more and more lenders are getting on board for this type of loan. So, when you do your research, look at the date of your article. Some of them are either outdated or using outdated sources.
Of course, there are far fewer lenders who offer this style of VA loan compared to a standard VA Home Loan, but that doesn’t mean it’s something you can’t do. If you can’t find a lender for your construction project, there are lenders who will have you make a down payment on the construction, and once it’s complete, will roll your fees into a VA loan.
VA Home Improvement Loan
A VA Home Improvement Loan is basically what it sounds like. You have a home, it needs improvements, and you need a loan to finance it all. However, it’s not nearly as easy as it sounds, and there are several qualification factors you need to consider first. Unfortunately, a VA Home Improvement Loan does not come without a VA Home Loan. So, if you want to do improvements, you must be purchasing your home through the VA and have your lender combine all the costs, including repairs. If you decided to do improvements after your purchase, you’ll have to look elsewhere. If however, you’re planning to add energy-efficient upgrades, you can do this during your initial loan process or after.
Are you thinking about getting a new heat pump? No problem, the energy-efficient loan will cover it. Were you thinking about adding thermal or storm doors and windows, the VA has you covered there too. What about a clock thermostat? You guessed it; the VA home improvement loan is your go-to! This specific loan also covers insulation, solar cooling and heating, and other various energy efficient modifications to your home, as long as it’s no more than $6,000.
If you’re thinking about doing some lavished remodeling to your home, the VA might not approve your loan. This doesn’t mean you can’t get the loan, it just means your repairs have to fit in within the community’s standards. Meaning, if you’ve purchased a standard, single-family home amongst other standard single-family homes, you won’t get approved for a home improvement loan to add in a million dollar pool. Keep in mind, a lot of lenders work under this same policy.
Of course, for most of us, we’re probably not looking to install a million dollar pool, so chances are, you don’t have to worry about this. That doesn’t mean you don’t want to consider exactly what it is you plan to do with your loan before you start all that paperwork. Simply put, your house has to qualify for the loan. If your house doesn’t meet the standard safety, security and habitability requirements, it better, and within 90 days of your purchase. If your home doesn’t meet the requirements, you could get approved for improvements costs to help you meet the standards, so long as it doesn’t cause your loan to go beyond the county’s loan limit.
What if your home doesn’t meet those standards? Well, you can still get the loan if you can meet it within those 90 days, but you can’t do the work yourself. Meaning, if your plan was to get the loan for materials and then do all the work yourself—because you’ve been watching a lot of the DIY Network and HGTV lately—you better think twice because it’s not allowed! What’s the point of this rule? Really, what’s the point of any rule—to protect you. But, don’t’ get too upset, the VA looks at it as a way to let the buyer retain their right to sue.
If all these rules don’t hurt your feelings just a little, maybe this 2% construction fee will. The VA loan requires a funding fee—unless you qualify for an exemption—but if you’re planning to purchase a loan for repairs or alterations to your home, you should plan on the possibility of paying up to 2% in construction fees on top of your 1.25-3.3% funding fee.
Who qualifies for a VA home improvement loan?
Who qualifies for a VA Home Improvement Loan is no different than who qualifies for a VA Loan, the difference isn’t who, it’s what qualifies. Therefore, as long as you are currently or were ever a part of any US Military component or a surviving spouse, you qualify to apply for the loan. Whether you actually get the loan is a completely different story.
What can I get with a VA home improvement loan?
The VA approves roof and floor repairs, bath, and kitchen remodels, and even HVAC. These all tend to be high-cost repairs, but with a VA Home Improvement Loan, you can finance each of them. Of course, this isn’t a complete list of everything you can utilize this loan for. But if it does anything to save energy, it most likely qualifies.
What if you don’t qualify for a VA home improvement loan?
If you don’t qualify for a VA Home Improvement loan, because you’re either planning on making extensive repairs after you closed without telling the VA or want to purchase more lavished materials, then you’ll be forced to look elsewhere for your loan needs. If this is the case, don’t worry; there are a lot of other great options for you out there to help you in the process.
Does the VA offer a rehab loan?
If your home needs more than a few improvements and something closer to a complete transformation, then you’ll need to look for a rehab loan. Unfortunately, this isn’t something the VA provides. The VA requires you to either buy a home that is move-in ready or will be if you’re using a construction loan. If your home needs deep, non-cosmetic repairs, you don’t qualify for the VA’s Home Improvement Loan. This means that gorgeous 1930’s Farm House you bought with foundation issues won’t be covered through the VA. If this is you, there are other options out there.
The FHA 203K loan is a government insured program. It’s perfect for any purchase that requires extensive repairs. This particular loan also covers unfinished construction, flipping (the home must be occupied), foreclosures, and condemned or abandoned property.
What is the best loan for home improvements?
The loan that is best for home improvements depends on what type of improvements you want to make. If you’re planning to make a cosmetic improvement, the VA Home Improvement Loan may be perfect for you. Are you planning to make non-cosmetic repairs? Maybe the FHA 203K loan is perfect for you. The type of loan also depends on how much you need. If you’re planning to make energy efficient changes, the VA will lend you up to $6,000, but any more than that you’ll have to look elsewhere. If you want to make more general repairs or improvements, but the total loan cost is going to be more than the county’s loan limit, you’ll have to look for another loan option as well if you don’t’ want to make a down-payment.
Chances are, you know about the VA’s home loan process and how it can help you save money. But what you might not be so knowledgeable on is the work assistance you can get through them. This work assistance can help give you valuable skill and feed your pocket. Below are a few ways you can make money through the VA or at least get you on your way to making that cold hard cash.
Compensated Work Therapy
Compensated Work Therapy or CWT is a service offered to veterans living with any mental or physical disabilities. This program can be utilized by any veteran who qualifies for VA health care, which means, even if you don’t have a 10% VA disability rating or above, you can still qualify for the program.
CWT consists of several programs and depending on your situation, is something worth looking into as a veteran.
TW is a time-limited service. During the program, the veteran is matched to a work assignment, where personnel at the work site will supervise them. The veteran does not get traditional employee benefits under this program, but they do receive pay at minimum wage under state or federal guidelines, whichever is greater. The goal of this program is to help veterans move from vocational work assignments to competitive employment.
SE is a great service provided to veterans with PTSD or TBI, who are having a hard time functioning independently in a work environment as a result of their condition. Unlike TW, which is time-limited, this program is ongoing and includes:
- Vocational assessment
- Rapid/individualized job search
- Job development and placement
- Assertive engagement
- Follow-along supports provided in the context of clinical treatment
Community-Based Employment Services
CBES is a program intended for veterans who need employment support but don’t necessarily have a psychosis diagnosis. The point of this program is to get veterans into competitive employment opportunities. During the program, the veteran will continue receiving clinical support along with:
- Skills training
- Job Development
- Job Placement
- Supportive counseling
- Interventions within the work environment
Vocational Assistance is offered to groups and individuals. The service is short-term and designed to help veterans realize what skills they have, the resources available to them, attitudes and expectation for finding employment. The service also helps veterans with the interview process and shows them how to succeed in their job without needing to continue the job search, job development or follow-up support.
SSE is a guidance program. The services are intended to help veterans via guidance on:
- Business practices
- Networking opportunities
- Linkage with community financial institutions
SSE gives veterans a choice through preferred work activities, with flexible hours and schedules, self-management and disability accommodations when they’re needed while potentially generating a substantial income.
SEd is intended to help veterans with education and training programs to help them achieve instructional goals. The program also works to link veterans and educational facilities.
The good thing about these programs is your income isn’t counted as income, according to the IRS. This means any money you make under a CWT program does not need to be reported to the IRS come tax time.
For veterans who need civilian work experience, the VA offers various types of employment opportunities. The opportunities fall under the Department of Veterans’ Affairs Programs or Veterans and Military Intern Programs.
Non-Paid Work Experience
Non-paid work experience or NPWE is a service offered by the VA to help place veterans in government jobs. Non-paid does not translate to the veteran making zero money, it’s not like a non-paid college internship. Instead it refers to the fact that the employer has no obligation to pay the veteran, instead, the veteran receives a subsistence allowance from the VA.
Because there’s no “red tape” to hiring and firing, they don’t have to pay the veteran, and there’s a minimal amount of paperwork required from the agency, the employer is more likely to take on the veteran and give them the valuable work experience they need.
On-the-Job Training Program
OJT, something every military member knows about. Well, it’s not just something that exists only in the military, it’s on the outside too. And, the VA is prepared to give you the OJT you want and need in order to be successful in competitive employment.
Both the veteran and agency benefit from the VA’s OJT program. The employer gets a hard-working veteran, and the veteran gets the necessary tools, equipment, and uniforms provided to them via the Department of Veterans’ Affairs. Again, like all these programs, reasonable accommodations should be made if needed so the veteran can receive the same opportunities as their fellow co-workers.
Yes, the VA also offers life insurance, and depending on where you’re at in life, this option could lift a heavy financial burden off your back with their competitive rates. Which is great, because when you’re getting out of the military the last thing you want is another high monthly payment. Again, the competitiveness will depend on where you’re in life.
Veterans’ Group Life Insurance or VGLI is an option all veterans who were discharged under anything other than dishonorable have an option to obtain. If you used SGLI—which chances are high you did—then you are eligible. If for some reason, you didn’t have coverage under SGLI, then you would not qualify for VGLI. For veterans that do qualify, when you initially sign-up for coverage, you can only select up to the same amount of coverage you had under SGLI.
For example, let’s say you had $200,000 worth of coverage under SGLI. When you get out of the military, if you elect VGLI for your coverage, you can only get up to $200,000 coverage. However, once 5-years have passed, you can increase your coverage by $25,000, and so on for every 5-years after, for a maximum amount of $400,000.
You also have the option of selecting less coverage under the VGLI plan compared to what you had with SGLI but in increments of $10,000.
Do I Need Life Insurance
Unlike health insurance, life insurance is not for everyone, because not everyone needs it, which leads to your question, “Do I need life insurance?” The answer truly depends on you. There may be a point in your life, where it’s a necessity, and then one day you wake up and you simply don’t need the coverage anymore.
Let’s say, you’re 65, all your bills are paid off and there’s no one depending on you for financial support, then life insurance may not be needed. Remember, life insurance isn’t for you, it’s for your family. If you don’t want your family having to worry about paying off the rest of your house, your car, paying necessary bills, putting food on the table, your kid’s college getting paid off, etc., then having life insurance might be a good idea. If these are things you don’t have to worry about, the life insurance might be pointless.
However, let’s say you’re in great health; you’re 65 but haven’t paid off all your bills. Using VGLI might be a financial burden because it’s considerably more expensive than getting life insurance through someone else. If you’re 70 or older, your premium rate will also increase. But, if you still have bills and your family is still depending on you for support, again, life insurance may be necessary.
Now, let’s say you did your 20 years—maybe more, maybe less—in the military, you got out, you’re 40 years old, have one kid in middle school, two kids in college, you just purchased a new home, and your spouse stays at home as a result of a physical handicap. In a scenario like this, you are the breadwinner, if you were to pass away, your living spouse would not be able to pay the mortgage, keep food on the table, keep your kids in college, or provide other essentials for him or herself and your kid who just started the 6th grade. This isn’t a scenario any of us wants to picture, but it is always a possibility. This is why life insurance is important. If you want to make sure your family is provided for in your death, life insurance is there to make sure that happens.
Should I get VGLI
After you’ve answered the question about needing life insurance, you’re left wondering who to get it from. Should you get coverage under VGLI? The answer again, it depends. Have you sustained considerable health issues as a result of your service or are you in great health? Do you smoke, or no? Are you over 60? How you answer these questions can increase or decrease your monthly payment when it comes to life insurance, and sadly, it can increase your chances of not getting the coverage you need.
However, VGLI can make things a little easier. Let’s say you did sustain considerable health issues while you were serving. With VGLI, as long as you apply for their life insurance within 1 year and 120 days of separation from the military and you were discharged with anything other than dishonorable, you qualify. This coverage is called term life insurance, meaning you can increase or decrease your coverage every 5 years. The only qualification is that you be a qualifying veteran, it doesn’t matter your health. Your age is also the only determining factor when it comes to your monthly premium, not your gender, not your health, not even if you’re a smoker.
Unlike some insurance companies, which require you to get a physical, provide medical documentation and then determine the price based on age, gender, medical history, smoking history, and your physical results, VGLI won’t require a deep look into your lifestyle as much, at least not if you apply within 240 days of separation—after this, you’ll have to answer questions about your health.
Not so sure about life insurance through the VA? Check out some of these top life insurance companies here.
IS VGLI Worth the Price
The price of life insurance can be a reasonable one, especially if you’re young and in good health. But, where you might see a bit of concern, is when you reach 60, at least under VGLI terms, in which case the price may seem completely unreasonable.
Depending on your age and health, the price of life insurance through most providers and VGLI can be competitive. Now, this doesn’t mean you can’t find insurance at a lower price. The real advantage comes if you have health issues, you’re a smoker, or you can’t get insured elsewhere. Once you’re over 60 the price raises considerably, and the competitive part goes out the window, especially if you’re over 75. Again, this is a good choice if you can’t get life insurance elsewhere because of your current health condition. If you can get $400,00 worth of coverage at 75 years of age for under $1,840/month, then it’s probably a good idea to look elsewhere. Again, make sure you need life insurance, and make sure you need the amount of coverage you’re paying for. If you don’t have $400,000 worth of expenses and no one is relying on you for financial support, then maybe you don’t need $400,000 worth of coverage. Maybe, $10,000 is all you need. So, do the math and elect the amount of coverage that makes sense to you, and then decide if the price is worth it.
Pros and Cons of VGLI
- Cost effective for the younger generation of veterans, especially if in poor health
- The older generation of veterans in poor health are eligible, even when most companies won’t provide coverage
- No proof of good health required if applied for within 240 days of separation
- You can increase your coverage by $25,000 every 5 years, up to $400,000
- Expensive for the older generation of veterans in good health
- Doesn’t require a physical exam, therefore lower prices can be found with other providers
- Not always the best option if you’re in excellent health
- You can only enroll up to the amount of life insurance you were covered for under SGLI (after 5 years you can increase the amount)
How to Sign-Up for VGLI
There are three different ways to sign-up for VGLI. The fastest way to do this is online. Simply go to Prudential or eBenefits’ online VGLI application. There will be step-by-step instruction through both platforms. If you’d rather not apply online, you can also print out the application on the VA’s website, fill it out, and mail it to:
PO Box 41618
Philadelphia, PA 19176-1473
Again, ensure you apply for VGLI no more than 1 year and 120 days after separation and no more than 240 days after discharge if you want to apply without having to answer any medical/health-related questions. If you apply after the 240-day mark, your health will be considered in determining your coverage, which means there’s a chance you could be left without an option of utilizing VGLI.
We won’t speak on this subject too much, because chances are you’ve had the SGLI through your military service. And while signing-up for it may have been the easiest insurance you ever purchased, and it was basically handed to you at 18-years-old, you probably didn’t know you could say no—that would have been stupid—and you’re pretty much going to ride it out until the end. Of course, you can change your coverage, but if you’re already out of the military this section probably won’t mean anything to you. Of course, if you know someone going in, this might be valuable information you can pass on, so at least they go in educated.
Should you Enroll in SGLI
The short answer is yes, yes you should. If you qualify for SGLI, VGLI or TSGLI then you should absolutely take advantage of the program. This is one of the least expensive life insurance policies offered you can get. The military is typically very good about paying out the allotted $400,000 to your next of kin. This money is can help pay for any unknown expenses that may arise following your death. In short, you’re essentially getting a life insurance policy that is designed to help your loved ones and not you. This is a great thing to do for those who you care about.
Who’s Eligible for SGLI
SGLI is available for a wide number of individuals and isn’t just limited to active duty military personnel. Eligible members include:
- Active Duty Military, Reserve, National Guard
- Employees of the US Public Health Service or National Oceanic and Atmospheric Administration
- Cadets of the US Military Academies
- ROTC members
- National Guard/Reserve- In order to be eligible for SGLI you must perform at least 12 periods of inactive training per year. You can also receive coverage if you’re drilling for points rather than pay.
Most service members opt for a 400,000 dollar coverage. However, anyone can choose any amount between $50,000 and $400,000, in increments of $50,000. If you are separating from the military your SGLI coverage will extend 120 days from the date of separation.
SGLI For Disabled Veterans
If you’re separated from the military with a total disability, you can extend your coverage for up to 2 years after the date of your separation under the SGLI disability extension.
Traumatic Injury Protection or TSGLI is designed to offer prolonged care assistance to you and your loved ones following a traumatic event that requires long-term care.
Can I get TSGLI?
You may be able to get TSGLI if you were insured by SGLI when you experienced a traumatic injury. According to the VA website in order to be eligible for TSGLI you must meet the following:
All of these must be true:
- You have a scheduled loss that is a direct result of the traumatic injury, and
- You suffered the traumatic injury before midnight on the day that you left the military, and
- You suffered a scheduled loss within 2 years (730 days) of the traumatic injury, and
- You have survived for a period of not less than 7 full days from the date of the traumatic injury (the 7-day period begins on the date and time of the traumatic injury and ends 168 full hours later), and
- You were an active-duty military member, a Reservist, a National Guard member, on funeral-honors duty, or on 1-day muster duty
Are any injuries excluded from TSGLI?
Yes. To qualify for TSGLI, none of the descriptions below can be true of your injury.
Your injury can’t:
- Be self-inflicted on purpose or the result of an attempt at self-injury, or
- Involve the use of an illegal drug or a controlled substance that was given or taken without the advice of a medical doctor, or
- Be the result of medical or surgical treatment of an illness or disease, or
- Occur while you’re committing or trying to commit a felony, or
- Be the result of a physical or mental illness or disease (not including illness or disease caused by a wound infection; a chemical, biological, or radiological weapon; or accidentally swallowing a contaminated substance)
How much does TSGLI cover?
TSGLI is paid out in a lump sum as a tax-free payment. This payment ranges from $25,000 up to $100,000 and is dependent on the service member’s injuries. You can submit a claim for TSGLI by going to the VA’s TSGLI webpage.
Will TSGLI be enough to cover my injuries?
This is a personal editorial note so please take it for what it’s worth… Most people are unaware of how much extreme trauma can cost their family. Even if you have Tricare or additional healthcare coverage you will almost always find yourself paying out of pocket if you don’t have the proper coverage. As a kid, my dad was a helicopter pilot. My family held two levels of life insurance coverage for my dad, one was if he died as a result of a helicopter accident, the other was if he died as a result of something other than a helicopter accident.
My dad ended up getting into a helicopter accident that left him severely disabled for three years. He eventually died as a result of his injuries. During his period of recovery, we managed to rack up over $1 million in medical bills. Had my family not secured the proper life insurance coverage we would still be trying to pay those bills to this day. In reality, $100,000 is a drop in the bucket when it comes to a traumatic injury or death. If you want a personal recommendation, get ample coverage.
Most often, a good life insurance policy can be obtained at a very nominal amount but will offer huge dividends in the long run. The reality is that if you don’t get insured, you won’t be the one that suffers. If you’re in a traumatic accident, your family will bear the burden of your death or traumatic injuries. Imagine your family having to care for you full time if you have a massive brain injury. Would you want them to also have to pay your medical bills or try to work while trying to take care of you? In short, life insurance is one of the best things you can do to support your loved ones. Get coverage, they will thank you.
How the VA Supports you Financially
Just a quick recap, the VA can help you save money if you take advantage of all the programs they offer. You can save on closing costs through a VA home loan. You can save money on training through more than the GI Bill, but also through their work assistance program, which gives you valuable work experience while putting money in your pocket. And finally, you can save money be electing VA life insurance, also known as VGLI. These, of course, are only a few ways to help save or make money with the VA. There’s also VA disability compensation, for those who qualify and then again, the GI Bill, especially if you have the post 9/11 version.