Military Life Insurance

August 26, 2018
Melissa Schreur

Military Life Insurance Misunderstood

Military life insurance is a low-cost option for families. Should this be their only coverage?

To answer this question, we must consider the reasons military families need life insurance in the first place. Many families are under the impression their benefit through the government is good enough.

In fact, it rarely crosses their minds. As military families, we often think many of our benefits “cover everything!” The more seasoned you are as a military family you realize that there are some instances to look into outside options. Life insurance is one of them!

Military life insurance is not an understood topic within the military community. Despite all the financial training the military offers. Financial training provided does not always cover life insurance options.

This leaves military families with lots of questions about what they should have. We are going to cover all the aspects of military life insurance. From the time families are in the military and when they become civilians again.

The point I want to drive home is that there are significant disadvantages for families who don’t carry supplemental coverage!

Overview of Military Life Insurance Benefits

Military life insurance comes in three most common forms:
  • SGLI for Servicemembers
  • FSGLI Spouses & Children
  • VGLI Veterans & Retirees
Benefits are administered through the Veterans Administration and underwritten by Prudential. The VA handles all policy service and claim needs.
 
In the event an insured person dies, the military will assign a Casualty Assistance Officer. These officer’s help survivors navigate their claim process and receive support at the unit level.
 
Servicemembers are not always eligible for life insurance products on the private market. The reason may be due to their high-risk occupation or territory of deployment.
 
Even if Servicemembers or spouses get a plan on their own, they should keep the SGLI and FSGLI benefits in place. The SGLI and the FSGLI are inexpensive. The SGLI includes coverage for Traumatic Injuries.
 
The two disadvantages of the benefits provided by the VA are:
  • They are not always enough coverage to protect a family. Especially if they lose a spouse!
  • Continuing coverage after military service is not flexible and competitively priced.

Military Specific Needs Calculation

How much life insurance do military families need? A general rule of thumb for consumers is 7-10 times a person’s annual, gross income. This is an easy way of calculating coverage needs.

Families can still use primary life insurance needs analysis.

The questionnaire covers:

  • Income Replacement
  • Debt Payoff
  • College Costs
  • Funeral Expenses
  • Current Assets
  • Current Coverage

They need to keep in mind the following considerations:

  • Servicemembers get benefits besides to SGLI
  • Many military spouses are stay at home parents
  • Servicemembers may not get out after losing a spouse
  • Spouses can’t always go back to work for competitive pay
  • Military family-owned businesses continue to rise
  • College benefits are available through the GI Bill
  • Extended family members are not always able to help

There are ways to use online calculators or worksheets to determine the coverage amount. Military families would benefit from having a professional assist them.

Servicemembers Group Life Insurance(SGLI)

Servicemembers get up to $400,000 in coverage in connection with their service. It is an elective life insurance benefit.

They can decline the SGLI at any time. Servicemembers sometimes think it isn’t worth the money. Sometimes they drop this benefit and believe they can invest the savings.

No matter how tempting it is to save money, I don’t recommend canceling the SGLI. The cost is a mere $29 a month for the full benefit. This also includes coverage for Traumatic Injuries.

The SGLI can be converted into a whole life policy with participating companies. When servicemembers leave the military, they receive FREE coverage for a period.

They can take part in the veterans benefit as long as they apply within the required time frame.

Spouses & Children(FSGLI)

Like civilian employer-provided life insurance, the military offers coverage for spouses.

This is a life insurance benefit that is connected to the Servicemember’s SGLI. If they drop the plan, then the spouse loses their coverage.

Spouses can get up to $100,000 in coverage for a low cost! Also, spouses cannot have more coverage than the Servicemember.

The formal policy name is the Family Servicemember Group Life Insurance(FSGLI). Although, many spouses aren’t familiar with the title. They know there is some benefit connected to their military affiliation.

The FSGLI covers dependent children as well.

As valuable as the plan is to families, most spouses are very under-insured with this plan.

Veterans & Retirees(VGLI)

Prior military members can take part in the veterans life insurance program one year and 120 days after they exit the service.

The coverage available is no more than the amount of SGLI that was in the place upon separation. If veterans or retirees apply within the first 240 days, there are no health requirements. Applying after the 240 mark, they have an extra eight months. But, approval is subject to a health review.

Military retirees sometimes compare life insurance options against the Survivor Benefit Plan(SBP). Many consider life insurance to be the less expensive route. However, the SBP is not comparable in benefits to life insurance. It is more comprehensive.

Retiring Servicemembers and their spouses should attend the briefings about the SBP to decide whether to opt-in.

Servicemembers who wish to decline this benefit must get approval from their spouse.

The VGLI is an excellent benefit for prior military members who are otherwise uninsurable or would get a higher priced policy on their own. Otherwise, it is not competitive, and veterans should check around to see what else they can get.

In most cases, they can get a better policy and price.

Melissa Schreur

Melissa Schreur has 15+ years helping consumers choose the best insurance protection. As a military spouse, she is dedicated to delivering world-class service to her customers. Insure The Heroes Life Insurance Agency is owned and operated by Melissa. She helps military families(past & present), parents and business owners secure affordable term life insurance coverage.