Denied SGLI vs. VGLI Life Insurance Claims: What Beneficiaries Need to Know
Denied life insurance claims under SGLI (Servicemembers’ Group Life Insurance) and VGLI (Veterans’ Group Life Insurance) are more common than most people expect. These policies are designed to protect active-duty military members and veterans, respectively, yet families are often shocked to learn that benefits may be withheld due to technical errors, paperwork problems, or alleged ineligibility. Understanding the differences between SGLI and VGLI—and how denials are handled under each program—is crucial for beneficiaries trying to recover what’s rightfully owed.
What is the difference between SGLI and VGLI?
SGLI covers active-duty servicemembers, reservists, and certain National Guard members. Coverage is automatic unless the servicemember opts out or chooses a lower amount. SGLI ends shortly after separation from service. VGLI is the continuation of that coverage—it’s an optional, renewable term policy offered to eligible veterans after they leave the military. While both programs are administered by the Department of Veterans Affairs and managed by the Office of Servicemembers’ Group Life Insurance (OSGLI), the legal standards and denial issues differ.
Common reasons SGLI and VGLI claims are denied
While both policies are federally administered, the reasons for denial often center around administrative problems or alleged ineligibility. For SGLI, denials may occur because the servicemember never completed a valid beneficiary designation, or the military failed to deduct premiums, causing the insurer to claim no coverage was in force. Other times, disputes arise over conflicting or missing documentation regarding the insured’s service status.
In contrast, VGLI claims are denied more often due to lapses in coverage. Since veterans must opt in to VGLI and pay premiums post-separation, even a small delay in enrollment or missed payment can result in a lapse. Claims may also be denied if the veteran failed to convert SGLI coverage to VGLI within the prescribed time frame, often 1 year and 120 days after separation.
Denied SGLI claims: military records and beneficiary issues
SGLI coverage is supposed to be automatic, but denials can arise from bureaucratic errors. In many cases, the Department of Defense fails to keep accurate records or update beneficiary designations. When a servicemember dies and no clear beneficiary is listed—or the form on file is outdated—families may be left fighting over the payout. In other cases, a servicemember may have tried to change the beneficiary but submitted the wrong paperwork, or the update never made it into their personnel file.
Disputes over SGLI proceeds often trigger interpleader lawsuits. These arise when two or more individuals claim they are the rightful beneficiaries and OSGLI deposits the money into court, leaving it to the legal system to sort out. Courts will typically look at the most recent valid beneficiary designation, but this process can be complicated by legal issues like divorce, remarriage, or conflicting state laws. While SGLI is federally governed, courts may still need to analyze whether state automatic revocation laws apply—and whether those laws are preempted by federal regulations.
Denied VGLI claims: missed deadlines and lapse issues
Unlike SGLI, VGLI is not automatic. Veterans must apply within a specific time frame and continue to pay premiums for the policy to remain in force. A common reason for denial is that the veteran failed to convert their SGLI to VGLI on time. Even when a veteran intended to enroll, delays caused by address changes, lack of information, or misunderstanding the timeline can result in an expired eligibility window. OSGLI has little flexibility once the deadline has passed.
Another common issue is nonpayment. Since VGLI requires ongoing premiums, any lapse in payment may cause the policy to terminate. OSGLI may send notices, but if a veteran fails to respond—especially due to illness, hospitalization, or homelessness—coverage may end before the insured’s death. In many of these cases, surviving family members are unaware that the policy was no longer active until after the claim is denied.
What makes federal group life insurance denials different
SGLI and VGLI claims are not governed by state law or ERISA—they’re administered under federal law, specifically through Title 38 of the U.S. Code. This means standard protections under state insurance regulations don’t apply. When a claim is denied, the appeals process must go through OSGLI and the Department of Veterans Affairs. Only after exhausting administrative remedies can a court review the case, and even then, judicial deference is typically given to the administrative record.
Because of this limited scope of review, it’s vital to submit detailed evidence and persuasive arguments during the appeal stage—not just during litigation. Whether disputing a denial due to an alleged lapse in VGLI coverage or challenging an SGLI beneficiary dispute, experienced legal guidance can make the difference between success and final rejection.
Beneficiary disputes in military life insurance claims
Perhaps the most emotionally charged denials occur when there are multiple potential beneficiaries. With SGLI and VGLI, the designation form is king. If the insured named someone as the beneficiary—even years ago—that person will likely receive the payout, regardless of current relationships, unless fraud or incapacity can be proven. Courts generally cannot override a valid federal designation based on equitable arguments alone.
However, problems emerge when the designation is missing, incomplete, or ambiguous. In those situations, federal regulations establish a specific order of precedence: spouse, children, parents, and so on. But this can leave longtime partners, stepchildren, or others excluded. Legal representation is essential in such cases to determine whether an outdated or defective designation can be legally challenged.
How we help families with denied SGLI and VGLI claims
Our law firm represents beneficiaries who’ve had life insurance claims denied under both SGLI and VGLI. We’ve handled interpleader actions involving multiple competing claimants and successfully resolved disputes related to missed deadlines, lapsed policies, and invalid designations. One recent case involved a $400,000 SGLI dispute between an ex-spouse and a surviving parent, which we resolved in favor of our client based on regulatory analysis and evidence of the servicemember’s intent.
We also assist families dealing with VGLI denials, especially when the veteran's health or service-related issues contributed to nonpayment or failure to enroll. In these cases, we prepare comprehensive appeals and help establish mitigating circumstances that may persuade OSGLI or the courts to reverse the denial.
If your SGLI or VGLI claim was denied, don’t give up. There are legal options available.
FAQ: Denied SGLI and VGLI Claims
Can I challenge a denied SGLI claim if the beneficiary designation is unclear? Yes. If the designation is outdated, missing, or ambiguous, courts may look at federal regulations and supporting evidence to determine the rightful beneficiary.
What happens if my loved one didn’t convert SGLI to VGLI in time? VGLI eligibility ends 1 year and 120 days after separation. If the conversion didn’t happen within that window, the claim may be denied. However, legal arguments based on misinformation or exceptional circumstances may still be viable.
Can VGLI coverage lapse due to a missed premium? Yes. VGLI requires ongoing premium payments. A missed payment can cause immediate termination, though OSGLI typically provides a short grace period. Reinstatement may be possible under certain conditions.
Do state laws impact SGLI or VGLI claims? Generally, no. Federal law governs both programs, and federal regulations preempt most state rules, including those regarding divorce or community property.
Is there an appeal process for denied SGLI or VGLI claims? Yes. Appeals must first go through OSGLI and the VA’s administrative process. If denied again, you may be able to seek review in federal court, but the review is often limited.