VA Disability Benefits and Life Insurance: What Veterans Should Know

Key Points:

• A VA disability rating does not automatically disqualify a veteran from life insurance.
• Veterans do not need to wait for a VA disability decision before exploring life insurance options.
• Insurers may consider the medical conditions underlying a VA disability claim, along with health and lifestyle factors.
• Veterans should compare multiple insurers, as eligibility and pricing may vary.

When leaving the military, veterans often have a long list of tasks competing for their attention. Filing a Veterans Affairs (VA) disability claim may be one of them. Evaluating life insurance needs may be another.

Because both processes involve health information, it's not unusual to have questions about how they relate to one another. Does a disability rating affect life insurance? Should one process happen before the other?

The right answer depends on your situation, so before you decide how to proceed, it’s a good idea to learn how VA disability claims work, the purpose of life insurance, and what might be the savviest financial choice for you and your family.  

What is VA Disability Compensation?

VA disability compensation is a tax-free monthly payment to veterans for service-connected injuries or illnesses. Veterans may also qualify for benefits if their condition is presumptively connected to service, such as exposure to toxic substances.

To help determine your eligibility for disability benefits, the VA website outlines the requirements. If you believe you’re eligible, you can fill out an online application. The average wait time to fully process a claim is 75 days, but it may be longer for more complex claims. While you wait, the VA may contact you to schedule medical exams or request documentation. To ensure smooth processing, don’t miss any appointments or delay providing information.

Once the VA decides on a claim, it assigns a disability rating ranging from 0% to 100%. A 0% rating does not provide monthly compensation. As ratings increase, veterans may become eligible for additional benefits, including tax-free compensation, health care, educational assistance and more.

Veterans with multiple service-connected conditions may receive a separate rating for each condition, which are then used to determine a combined disability rating. However, the VA does not simply add the individual percentages together. Instead, it uses a formula that considers the veteran’s remaining level of health after each condition is applied. As a result, two individual ratings may produce a combined rating that is lower than their mathematical sum.

What Veterans Should Know About Life Insurance

Life insurance is a contract between you and an insurance company. In exchange for premium payments, the company agrees to provide a death benefit to your beneficiaries if you die while the policy is in force.

For veterans, life insurance can be an important consideration during the transition to civilian life. As Servicemembers’ Group Life Insurance (SGLI) coverage ends after separation, veterans may want to explore Veterans’ Group Life Insurance (VGLI) and other life insurance options, to determine how best to replace up to $500,000 in coverage. A family’s financial obligations don’t disappear if a primary earner dies unexpectedly, and life insurance can help provide support to loved ones while they navigate the ramifications of a loss.

Before issuing a policy, insurance companies evaluate the risk of insuring an applicant through a process known as underwriting.

During underwriting, the insurance company will review a variety of factors, including:

• Age
• Lifestyle
• Family medical history
• Personal health information

This information helps the insurer determine whether to offer coverage, how much coverage to offer, and what premium to charge.

Where VA Disability Benefits and Life Insurance Intersect

VA disability claims and life insurance underwriting overlap in one important area: Both may involve a review of the veteran’s medical history.

The VA asks whether a condition is connected to military service and how severely it affects the veteran. An insurance company evaluates the applicant’s health and the potential risk of issuing a policy. Because these are different evaluations, a VA disability rating does not automatically determine whether a veteran qualifies for life insurance or how much coverage may cost.

Instead, an insurer may look more closely at the medical condition underlying the disability rating. The nature and severity of the condition, its treatment and its effect on the applicant’s overall health may all be relevant during underwriting.

As a result, two veterans with the same VA disability rating may receive different life insurance decisions. Likewise, a higher disability rating does not necessarily make coverage unavailable. Eligibility, coverage options and premiums depend on the insurer’s underwriting standards and the applicant’s overall circumstances.

Veterans may also benefit from comparing multiple insurers, because underwriting standards and pricing can vary. If you have questions about transition planning, risk management and long-term financial goals, consider speaking with a First Command Financial Advisor.

Frequently Asked Questions

Should a VA disability claim or life insurance application come first?

One process does not have to wait for the other. A life insurance application does not affect a veteran’s ability to file a VA disability claim, and a VA claim does not necessarily prevent a veteran from qualifying for life insurance.

However, timing may still matter. Filing a VA claim within one year after leaving active service may affect the claim’s effective date, which helps determine when benefits begin. Veterans who need more time to gather evidence may also be able to submit an intent to file, which can preserve a potential effective date if they complete the claim within one year.

Life insurance considerations are different. Veterans should answer all application questions completely and accurately, regardless of whether the VA has issued a disability rating. Because medical and financial circumstances vary, veterans may want to consider both processes early rather than unnecessarily delaying either one.

If I have a 100% disability rating, do I even need life insurance?

Maybe. Disability compensation helps support the veteran, while life insurance helps protect loved ones after a death. Even veterans with a 100% disability rating may want to consider additional financial protection for their family.

Will the VA share my disability information with a life insurance company?

The VA generally protects veterans' personal information and does not routinely share it with life insurance companies. However, an insurer may ask an applicant to authorize access to relevant medical records during underwriting.

How can veterans strengthen a VA disability claim?

Keep thorough medical records, preserve documentation and gather evidence connecting your condition to military service. Veterans may also seek assistance from a Veterans Service Organization (VSO) or a VA-accredited representative.