25 Jan What Is VMLI, Veterans’ Mortgage Life Insurance?
Are you a severely disabled veteran or service member with an ongoing mortgage? Surely you wondered who would pay off your mortgage if you died unexpectedly. In this case, opting for VMLI (Veterans’ Mortgage Life Insurance) might be a wise option.
VMLI isn’t an ordinary life insurance option. Rather than providing a fixed amount upon your death, VMLI is a mortgage life insurance specifically designed to help the family members of a disabled veteran pay the mortgage if the veteran dies unexpectedly.
Keep reading for an in-depth guide on VMLI.
What Is Veterans’ Mortgage Life Insurance (VMLI)?
Veterans’ Mortgage Life Insurance is a mortgage insurance coverage plan available to veterans and service members suffering from severe disabilities. In the event of the member’s untimely death, the purpose is to help the grieving family pay off the mortgage.
This coverage option is available for new mortgages, existing mortgages, second mortgages, refinance mortgages, and construction loans.
To qualify for this coverage, you must pass specific eligibility criteria. Though this option might not be available to all, it is a remarkable opportunity if you are trying to pay off a mortgage while living with a disability.
Related Article: Best Life Insurance Companies for Veterans
Eligibility Requirements for Veterans’ Mortgage Life Insurance
To establish your eligibility for VMLI, you must be a severely disabled active/former service member eligible to receive a Specially Adapted Housing Grant (SAH) from the US Department of Veterans Affairs.
VA’s Specially Adapted Housing Grant is a housing grant provided to severely disabled veterans for modifying their existing houses to accommodate their needs. You must prove that the disability or injury is service-connected to qualify for this benefit.
To qualify for VMLI, the following conditions must be met:
- You are receiving SAH Grants
- You own the title of the house
- You have an ongoing mortgage on that house
- You applied for this insurance before you turned 70
You can also apply for VMLI if you have sold a house to purchase a new one. Also, as per the amendments made back in 2008, you are eligible for VMLI if you have service-connected severe burns.
Related Article: What is a Veterans Life Insurance Rider? Different Types Explained
Do You Need VMLI?
If you are a severely disabled veteran trying to pay off a mortgage, opting for VMLI might be a good option to safeguard your family in case the unexpected happens.
You can ask your loan provider to figure out if you qualify for VMLI or not. You can also apply on your own by filling out VA Form 29-8636. If you have already received SAH, you can ask the loan provider for further assistance.
So, if you have a severe disability and you are eligible for SAH then you should strongly consider VMLI. While it might add a little more to your premiums, your family won’t have to worry about the mortgage if you pass away unexpectedly.
Some other things you’ll want to consider before applying for VMLI include:
- A claim will not be provided to your family upon your death. Instead, it would be paid to the mortgage provider to consolidate the mortgage.
- This coverage is decreasing-time insurance. Meaning, as your mortgage amount falls, so will the coverage.
- The policy won’t pay you any dividends.
Related Article: Term vs. Whole Life Insurance: Which Is Best for Veterans?
What Life Insurance Benefits Does VMLI Offer?
The maximum coverage available to veterans and service members under VMLI is $200,000. Moreover, as stated above, this coverage will decrease over time.
This insurance will cease once you have paid the entire mortgage. Moreover, unlike other life insurance options, you cannot borrow anything against it as it does not carry a cash value.
To qualify for this coverage, you must apply for it before you reach the age of 70.
The amount of coverage you receive depends upon the following:
- The balance of the ongoing mortgage
- Your age
- How much coverage you need
- How many payments you need to consolidate the mortgage
How to Apply for VMLI
But before you take advantage of this coverage, you must prove that you are eligible to receive Specially Adapted Housing grants. If you have not applied for SAH, it’s recommended to start with that process first.
SAH is available to veterans who suffer from any of the following qualifying conditions:
- Loss of more than one limb
- Loss of use of more than one limb
- Loss of use or loss of a lower leg and additional health issues associated with it
- Loss or loss of use of legs combined with the blindness of both eyes
- Severe burns
- Loss or loss of use of a leg after September 11, 2001, preventing you from walking or regaining balance
You can apply for VMLI by filling out VA Form 29-8636. After qualifying for the SAH grant, you can apply for VMLI after getting in touch with an insurance or loan provider.
Premiums are usually determined by the remaining balance of your mortgage, your age, and the remaining time length. Also, because this is a time-decreasing mortgage, its coverage will decrease over time.
If you are paying the premium from VA disability compensation or a pension, you must pay it by deduction of those benefits. You can also opt to make payments from your income every month.
Additionally, you will no longer receive VMLI benefits if any of the following occurs:
- You fail to make a payment
- You paid off the entire mortgage
- You requested the coverage to end
- You no longer own the property
To learn more about VMLI premiums, you can download the brochure by clicking here.
Related Article: A Quick Guide to Life Insurance for Disabled Veterans
What if You Make Changes to Your Mortgage or Move?
If any of the below is true, you would have to let the US Department of Veterans Affairs (VA) know:
- You are transferring the mortgage from one lender to another
- You are refinancing your home
- You are selling your property
- You are liquidating the mortgage (simply put, you are going through foreclosure because you cannot pay back the mortgage)
- You are moving to a new house
If any of the above is true, you can let the VA know by sending a notice of change to:
Department of Veterans Affairs
Regional Office and Insurance Center
PO Box 7208 (VMLI)
Philadelphia, PA 19101