2022 AFBA Financial Planning Guide

on the circumstances) will either pay the institution a guar­ anteed amount of the outstanding mortgage or pay the balance of the mortgage and assume title to the property. As of January 1, 2020, loans are no longer are subject to the Federally-established VA loan limit aka Conforming loan limit maximums. This means veterans who have full entitlement may obtain no-down payment VA-backed loans in all areas of the country, regardless of home prices. Loan limits still apply for those who have remaining entitlement. The standard VA loan limit in 2022 is $647,200 for most U.S. counties. VA loan limits for high-cost counties, top out at $970,800 for a single- family home. This program can be used to buy a detached home, townhouse, or condominium including those that are under construction. It can also be used to purchase a mobile home or farm (but not farm machinery or livestock). Also, the VA loan guaranty can be used to refinance an existing home loan, make repairs or improve an existing home, and to buy a lot for a mobile home the veteran already owns. Home loan financing is a complicated area and involves one of the largest financial transactions that most veterans will make. Consequently, before using your Home Loan Guaranty, it is best to discuss the benefit with a qualified VA representative. Visit www.benefits.va.gov/homeloans for more information. 6–8. LIFE INSURANCE. Many commercial insurance policies contain war clauses which deny benefits if the death of the insured is the result of war or conflict. To fill this void, the government has sponsored a series of life insurance programs which have provided uninterrupted protection for military personnel and veterans since 1919. The following discussion examines the major programs that are currently open for enrollment. Further information can be found at www.benefits.va.gov/insurance . Servicemembers’ Group Life Insurance (SGLI). The government sponsored Servicemembers’ Group Life Insurance (SGLI) program was created in 1965 to provide group term insurance to all active duty personnel. The program was amended in 1974 to extend coverage to members of the ready and retired reserve and to create the Veterans’ Group Life Insurance (VGLI) program. SGLI coverage is available in $50,000 increments up to the maximum of $400,000. Active duty members are automatically insured for $400,000. The cost of SGLI coverage $.60 per month per $10,000 of coverage — $400,000 of coverage costs $24 per month.

Servicemembers can use the SGLI Online Enrollment System (SOES) to manage the amount of their SGLI and spouse coverage and to designate or update beneficiaries. To access SOES, go to milconnect.dmdc.osd.mil/milconnect sign in, and go to Benefits, Life Insurance SOES — SGLI Online Enrollment System. As is the case with most term plans, SGLI does not build a cash value, has no loan value, and provides no extended coverage value. Members participating in the SGLI program may designate any individual or legal entity (such as a trust) to be the beneficiary of their insurance. SGLI settlement options are fairly simple — proceeds can be paid in either a lump sum or 36 equal installments at the discretion of the member or the beneficiary if the member did not select an option. Traumatic SGLI (TSGLI). This program is a rider under SGLI that provides payment to any member of the uniformed services covered by SGLI who sustains a traumatic injury that results in certain severe losses. Coverage is automatic for any member covered by SGLI for an additional $1 a month. Insurance payments are based upon the severity of the injury and range from $25,000 to $100,000. Family Servicemembers’ Group Life Insurance (FSGLI) . Members with SGLI are eligible to get FSGLI coverage for their dependent children and spouse (unless the child or spouse is insured under SGLI as a Servicemember). Spousal coverage cannot exceed $100,000 and the monthly premium costs are determined by the amount of coverage and age of the spouse. The cost of FSGLI ranges from $0.45 per $10,000 coverage for a spouse under 35 to $4.50 per $10,000 coverage for a spouse over 65. The program provides $10,000 of coverage for dependent children at no cost to the service member. Veterans’ Group Life Insurance (VGLI). The Veterans’ Group Life Insurance program is designed to give military personnel the opportunity to continue the insurance protection they had under SGLI. When a member separates from active duty, his or her active duty insurance (SGLI) remains in force for 120 days. Coverage under VGLI is designed to go into effect on the 121st day following separation, thus providing the member with continuous insurance protection. Veterans must apply to convert SGLI to VGLI within one year and 120 days from discharge. If their application is submitted within 240 days after discharge, they do not need to submit evidence of good health. Those who apply after the no-health period are required to answer questions about their health. You can apply online or create an account to pay


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