VA Announces a $150 Million Premium Break With 3 Months of Free VGLI

The Department of Veterans Affairs announced on September 16, 2026, that it is granting Veterans enrolled in Veterans Group Life Insurance (VGLI) a three-month “holiday” by suspending premium payments from November through January. More than 457,000 VGLI enrollees will pay no premiums for those months, with an average savings of $330 per enrollee. The VA estimates this premium holiday will save Veterans approximately $150 million.

What Is VGLI?

Veterans Group Life Insurance is term life coverage for Veterans who elect to convert their Servicemembers Group Life Insurance (SGLI) they carried on active duty when they separate. Premiums vary by age and coverage amount, but can be anything from $30 to $2,200 per month for $500,000 in coverage.

Coverage runs from $10,000 to $500,000 and is capped at whatever amount the veteran held at separation. The average premium is $110 per month. As VGLI is term insurance, it runs for a set length of time at a given premium and coverage amount. Coverage continues as long as the Veteran is paying premiums. The VGLI program is managed by the Office of Servicemembers Group Life Insurance (OSGLI).

Veterans may not realize it, but the VA is not the actual insurer. Rather, their VGLI policy is part of a group insurance plan purchased from Prudential. The VA is the policyholder and purchases the group insurance under the authority granted under 38 USC 1966. That law permits the VA to buy a group policy and exempts it from certain federal procurement requirements while requiring the insurer to meet certain qualifications. The VGLI insurer must be licensed in all 50 States and D.C., and it must hold at least 1% of all group life insurance in force in the United States.

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Prudential has been the primary insurer since the inception of the VGLI program in 1974, having been the primary insurer for the SGLI program since 1965. The law also requires Prudential, as the primary insurer, to reinsure with other insurers to spread the risk.

How the “Premium Holiday” Will Work

Most Veterans with VGLI policies will be eligible, but the mechanics of how this will work are worth outlining. For Veterans to be eligible for the premium holiday, they must have active coverage on November 1, 2026. Veterans with active coverage don’t need to do anything. The pause in their premium payments will occur automatically, and the VA will notify enrollees by mail or email.

Allotments from the Veteran’s retired or VA disability pay will automatically pause and then resume once the three-month holiday finishes. The Veteran will not need to do anything, but as always, Veterans should monitor their pay to ensure the process works as advertised. The same is true for Veterans who pay through VGLI Autopay. The charge to their bank accounts will stop and start automatically. Past-due balances will always be due, so if a Veteran owes VGLI, those balances will be collected regardless of the holiday.

Veterans who have pre-paid or who pay their own premiums will have to make the changes themselves for those three months. For Veterans who have pre-paid their premiums, those three months' pause in their premiums will become credits to their account. Veterans can contact the OSGLI office for a refund (osgli.osgli@prudential.com, 800-419-1473). Veterans who pay their own premiums via automatic bank transfer or check will have to manually stop/start their payments.

Newly separated Veterans may not get the full three months, depending on when they separate and when their policy conversion from SGLI becomes effective. Also, the first month’s premium is not part of the holiday pause. Since SGLI covers newly separated Veterans for 120 days, VGLI does not begin until the 121st day. For Veterans who begin their coverage on Nov 1, they will get two months with no premiums; for coverage beginning Dec 1, one month. A policy with coverage beginning January 1, 2027 does not qualify, nor does a policy that lapses or is canceled on or before October 31, 2026.

Veterans should consult the VA VGLI Premium Holiday FAQs page to ensure they have the most up-to-date information.

How Can the VA Afford to Do This?

The VGLI program pays for itself. Veterans’ premiums pay the costs of the program such as claims and administrative costs, except for a small slice of the program that uses federal subsidies for certain disabled Veterans.

Veterans’ premiums go to Prudential via the OSGLI. When those premiums and the interest accrued exceed the costs and claims, the law requires Prudential to hold those funds as a “special contingency reserve” for the program. Prudential pays interest on that surplus at a rate the VA approves. Once the surplus exceeds the requirement for the reserve, the VA invests that money in US Treasury securities.

When there is a surplus, the VA can manage the surplus in two ways: a rate reduction and a premium holiday. These are not the only ways the VA can manage the surplus; there are other options, but these are the most common. Under the Biden administration, the VA announced a rate cut anywhere from 2-17% for VGLI enrollees on December 12, 2024. This premium holiday is a second step to manage that special reserve.