What Is United States Government Life Insurance?

The United States Government Life Insurance (USGLI) was a life insurance program established in 1919 to provide term, permanent and endowment insurance up to $10,000 to veterans who served in the United States military prior to 1940. The United States Government Life Insurance program was developed to manage the existing World War I policies and any new policies thereafter. More than four million life insurance policies had been issued during WWI. The program was closed to new issues on April 25, 1951.

Understanding United States Government Life Insurance

All premiums paid into United States Government Life Insurance (USGLI) are deposited and covered into the U.S. Treasury to the credit of the United States Government Life Insurance Fund. Funds are available for the payment of losses, dividends, refunds, and other benefits provided for under such insurance, including such liabilities stipulated in judgments of a district court of the United States or the United States District Court for the District of Columbia, and for the reimbursement of administrative costs. 

History of United States Government Life Insurance

In 1917, as the United States entered World War I against Germany, Congress approved issuing government life insurance to provide insurance benefits for veterans and service members who may be unable to purchase insurance from private companies due to the increased risks to which military service members are exposed, because of a service-related disability, or because private insurance premiums would be much higher than normal rates. As of 2010, there were approximately 8,000 active policies remaining, with the policy holder's average age of 88. Since January 1, 1983, all USGLI policies have been paid-up, with no further premiums becoming due. Annual dividends are still paid on these policies.

Beginning in April 1917, all active military personnel received a $4,500 insurance policy payable by the federal government in the case of death or disability. In October of the same year, the government began selling low-cost term life and disability insurance, without medical examination, to all active members of the military. War risk insurance proved to be extremely popular during the war, reaching over $40 billion of life insurance in force by 1919.

Modern Replacement to United States Government Life Insurance

Service Member Group Life Insurance is the modern replacement for USGLI. Its low-cost term life insurance offers a great deal of coverage for the service members at a low cost with limited to no exclusions. Instead, SGLI provides life insurance coverage to the member of the military for the entire time that they are in the military and continue to make premium payments through payroll deduction. Therefore, the term of the life insurance coverage can last from just a few months of service to someone who has a 20, 30 or even a 40-year military career. Military members are also covered by SGLI for 120 days after leaving the service whether voluntarily, due to retirement or involuntarily.