Do You Need Additional Coverage Or Private Life Insurance
While you’re automatically enrolled in SGLI, you do have the option to change your coverage. You can add additional coverage on top of your SGLI coverage with a private-sector policy, or you can opt to drop your SGLI coverage completely.
While considering your options, you should take a look at your family’s expenses. For example, if the combination of your housing, utilities, school and other expenses is $3,500 per month, then a $400,000 maximum value insurance policy would cover those expenses for 9 1/2 years. If you want more coverage than that, you’ll need to look elsewhere: the VA program maxes out at $400,000.
Some private providers offer policies in which you combine your SGLI coverage with their coverage. For example, you could set your base SGLI policy to $100,000 and purchase a private sector supplemental policy of $400,000 for a total of $500,000 in life insurance. Private sector policies are priced competitively, so that $500,000 in coverage might cost about the same or even less than $400,000 of coverage from the VA.
You’ll have many potential providers to choose from. You might start with military mutual aid associations like the Army & Air Force Mutual Aid Association or the Navy Mutual Aid Association. You should also check out commercial insurance companies such as USAA, the Military Benefit Association, Mutual of Omaha, The Hartford and US Bank.
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Do Service Members Need Life Insurance
Life insurance is one of the most important components of your personal financial plan. Unfortunately, life insurance is poorly understood, and breadwinners’ mistakes invariably cause great financial hardship for their survivors. The primary purpose of life insurance is to protect your survivors from the adverse financial consequences of your premature death.
If service members have no survivors, then it’s unnecessary to buy life insurance beyond the amount needed to pay for any outstanding debts or settle the estate.
If service members are married or have young children, then it’s prudent to have life insurance to insulate the family from financial disaster. service members who want to marry or have children soon should explore life insurance options.
You Lose Sgli When You Are No Longer Active Duty
As previously mentioned, once you leave your job or are no longer on active duty, you lose your employer-provided group life insurance. This is true for SGLI coverage.
Schaffer said that during the “transition assistance program” that occurs 3-5 days before exiting the military, there’s a discussion about switching to Veterans Group Life Insurance . However, active duty servicemembers exiting service have 240 days after leaving service to automatically switch to VGLI. Otherwise, they would have to qualify for it by going through underwriting to prove you’re in good health.
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Life Insurance Underwriting Process
You dont always have to go through as detailed of an underwriting process if you are buying a group life insurance policy, as the same terms are generally given to everyone that falls into your same group. But you may have to do a more formal underwriting process if you are buying your own health insurance policy. This frequently involves the life insurance company sending a nurse or medical technician to your home to give a light physical, which usually includes drawing blood and taking a urine sample. They will also take your height and weight and you will be required to fill out a health questionnaire. The results of your tests and questionnaire will determine your risk category.
Your premiums are primarily determined by your health and age. However, other factors, such as occupation, tobacco use, lifestyle, or high-risk hobbies, may cause your premiums to increase.
How Military Rank Affects Your Life Insurance Coverage
Some insurance companies have specific coverage limits based on your rank, regardless of military branch. The exact coverage limits vary by provider.
Hereâs an example of coverage limits by military pay grade, with those with enlisted status having lower limits and commissioned officers having the highest:
$250,000 for pay grades E1 to E5
$500,000 for pay grades E6 to E9 and W1 to W5
$1,000,000 for pay grades O-1 to O-10
The higher the risk that youâll die while covered by your life insurance policy, the more expensive your premiums will be and the more likely you might be. High-ranking officials are considered lower risk because theyâre less likely to see the same sort of combat dangers as lower-ranking service members.
However, some insurers will follow the same income guidelines they apply to civilians. These guidelines allow you to buy up to a certain multiple of your income, depending on your age, e.g., up to 25 times your income under age 40.
Insurers will apply civilian income guidelines to applications from Reserve or Guard members who are not alerted or mobilized. As mentioned above, Special Forces, Rangers, SEALS, Marine Force Recon, Marine Raiders, Delta Force, Air Force Pararescue, and other similar units are more likely to be declined even if they donât have active deployment orders.
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Average Cost Of Life Insurance Per Month
As mentioned earlier, finding an average is tough. Companies determine their rates based on the following primary factors:
- Death benefit
- Tobacco use
Additionally, most all companies have more underwriting criteria. Theyll ask about your citizenship, driving record, family medical history, criminal record, etcCompanies have to do a full review on the majority of their applicants. Especially if one is asking for a million dollar life insurance plan.
Life Insurance For Active Duty Military
The U.S. government automatically provides a life insurance policy for active duty servicemembers, but it’s not the only option for servicemembers seeking coverage. Some military members stick with the standard coverage. Others want a little more coverage than the government-sponsored policy offers and purchase a supplemental private-sector policy. Still others opt out of the government program completely and buy a private-sector policy.
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There is no such thing as one size fits all when it comes to life insurance. SGLI is a great option, however, it may not suit most situations. When considering life insurance these are the five things to note that will help determine how much life insurance you should have.
Consideration No : You Should Spend A Lot More Time Learning About What The Policies Provide Than Worrying About Price
Most people think of life insurance coverage in terms of how much their monthly premium costs. Instead, take the time to understand your policy and to fully understand the clauses, fees and everything else that the insurance company could put into your contract.
It is straightforward when it comes to SGLI or VGLI . There is no underwriting requirement, and your premiums are publicly available. If you have a policy from another provider take some time to understand it.
Understanding the ins and outs of your life insurance policy or possible alternatives is not a simple matter. Discuss your insurance needs with your providers financial counselor or a fee-only financial planner. While most states do not allow financial advisors or financial planners to compare insurance policies without an insurance license , they can help:
- Analyze your insurance needs and help you determine how much you need
- Refer you to low-cost insurance agents who can help you analyze your specific policy and price out new policies
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Life Insurance Coverage Through The Va
Here are the life insurance programs automatically provided by the U.S. government’s Veterans Affairs Department for active duty servicemembers, the National Guard and Ready Reserve and other military and government-related parties.
Servicemembers Group Life Insurance
Active duty servicemembers are automatically signed up for this term life insurance, though they can choose to decline the coverage.
The following groups are eligible for SGLI coverage:
- Active duty Army, Navy, Marines, Air Force or Coast Guard
- Active National Guard & Ready Reserve and Inactives with 12 periods of training per year
- Military academy cadets & midshipmen
- Individual Ready Reserve volunteers
- National Oceanic and Atmospheric Administration and US Public Health Service commissioned members
This term life insurance pays benefits for death and disablement. Coverage is automatically set at the maximum $400,000, but servicemembers can choose to take less coverage, in increments of $50,000.
Coverage is automatic when you enroll in the military, so you won’t have to complete a separate application process. But you will need to contact your military branch personnel office to designate beneficiaries.
To reduce or decline your coverage, or to designate your beneficiaries, complete form SGLV 8286 – Servicemembers Group Life Insurance Election & Certification. Once you’ve completed the form, submit it to your military branch Personnel Office.
Additional Coverage For Your Family
The maximum amount of the life insurance benefit you can get with VA-sponsored programs is $400,000. This is designed to help replace income for a few years should something happen to you. Many families will want more coverage than this and look to private insurance companies to add a second policy.
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How Much Life Insurance Do I Need
When thinking about taking out a life insurance policy it’s important to think about all of your financial commitments – do you have a mortgage with years still to pay? Do you have children? Do you have any other family members that are dependent on you financially?
If you were no longer able to provide for these people or meet these payment, and you have no other plans in place to fund things, then a policy that meets the sum of these is worthwhile investigating. Aside from a mortgage, think about the costs of running a home, running a car and raising children.
How Much Life Insurance You Should Purchase For A Spouse
Your spouses life also cant be measured with a dollar figure, so youll need to consider how their death would change your financial picture.
If youd have to hire live-in help, build this cost into your spouses coverage. Likewise, if youd have to move or change jobs as you adjusted to the loss of your spouse, you should consider these costs as you build the safety net life insurance can offer.
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How To Have The Life Insurance Conversation
Your spouse is one of the most important people in your life someone you love, trust and rely upon every day. But when it comes to life insurance, your spouse may play an even more important role than you realize.
The spouses of service members are often in charge of the home front. They may be the ones paying the bills, dealing with household tasks and managing family schedules. This makes your spouse a knowledgeable resource when thinking about how much life insurance you need. Your spouse knows the ins and outs of your family expenses and debts and can give you a clear picture of how much monthly income your loved ones would need to maintain their standard of living in the event of your death.
Life insurance isnt just something that the family breadwinner should consider. Even if your spouse is not employed or works part time, they contribute to child care, maintenance, housework and more. By making sure you both are adequately covered, your family can enjoy greater peace of mind, knowing that you are prepared for the worst possible outcomes.
Understandably, no one wants to dwell on the thought of life without their loved ones, but it is a vital discussion that can make a huge difference at a difficult time in the future. Use the following tips to make having that conversation a bit easier:
Group Life Insurance Versus An Individual Policy
When a civilian buys a personal life insurance policies, they typically complete a thorough underwriting process, which helps the insurer determine the applicants eligibility for coverage.
In a nutshell, it works like this: An applicant who poses a higher risk of dying sooner will pay more for coverage or may even be ineligible for coverage. People who present the lowest risk can get excellent life insurance rates.
Insurers determine this risk by asking questions about an applicants lifestyle, profession, health history and family health history. An applicants age, tobacco status and current health condition help underwriters assess this risk. Applicants also often undergo health exams.
Group policies, like those military members and veterans can get through the Department of Veterans Affairs, work differently. Assembling policies in a group insulates the insurer from the risk associated with individual plans.
Military members can get group coverage through:
- Servicemembers Group Life Insurane: SGLI provides group coverage at great rates for active-duty military members and some trainees and military academy students.
- Veterans Group Life Insurance: VGLI provides group coverage for veterans.
- Family Servicemembers Group Life Insurance: FSGLI allows SGLI enrollees to extend coverage to their family members. In most cases, the service member pays the premiums.
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Health Care Commissary And Exchange
The death of your loved one does not end your rights to certain service benefits and privileges.
- Surviving spouses who do not remarry are eligible to continue their TRICARE benefits as an active-duty family member for three years at no cost. Afterward, they become Transitional Survivors and receive benefits at the retiree family member rate, which may require a payment of a yearly enrollment fee.
- You are also eligible to continue shopping at the exchange and commissary indefinitely unless you remarry.
- Unmarried children of the deceased service member may use these privileges, at no cost, until they are 21, or 23 if enrolled in a full-time course of study in a secondary school or in a full-time course of study in an institution of higher education.
- You may use the installation theater and some other Morale, Welfare and Recreation facilities.
- Family members must ensure their information listed in the Defense Enrollment Eligibility Reporting System is updated.
Life Insurance For Veterans With Medical Issues
VGLI coverage may be a good option if you have a medical issue. You can qualify for VGLI coverage regardless of your health if you apply quickly after leaving the military. This means you may be able to get up to $400,000 of coverage without your medical history influencing the cost of your policy. Plus, VGLI coverage can be less expensive than some private options that skip the medical exam, such as guaranteed issue life insurance. These policies dont require any information on your health, but typically offer lower coverage amounts at a higher cost.
For example, a $25,000 guaranteed issue policy for a 50-year-old man costs $844 per year, according to Quotacy. The same applicant can get $100,000 of coverage for $396 per year with a VGLI policy.
However, guaranteed issue premiums typically stay the same throughout your entire life, while premiums for VGLI coverage increase over time. So, its a good idea to get quotes from a range of private insurers before you make a decision.
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When Should You Consider Private Life Insurance For Veterans
If you qualify for the VA-sponsored policies for veterans above, you should consider contributing to those before adding or changing to private life insurance. However, there are a number of reasons you may want to go with a private company. Here are some benefits of affordable private life insurance for veterans to consider:
Other Life Insurance Options
SGLI is an excellent benefit since it is a guaranteed life insurance policy with flat premiums, regardless of your age, health, or other factors. You dont need to go through an underwriting process. You also dont need to go through an underwriting process if you convert your SGLI policy to a VGLI policy upon separating from the military.
But sometimes you may wish to purchase additional life insurance, you may wish for a life insurance policy you can take with you after leaving the military, or you may find better rates elsewhere. So its good to assess your needs and shop around.
There are many pros and cons to purchasing life insurance through a private organization or company, including the ability to buy larger policies, portability, and more. Its a good idea to get quotes through several companies, as rates may be higher or lower than what you can find through a military organization. You should also read the fine print, because many private life insurance companies may not cover a death that occurs in a war zone, or during certain dangerous activities.
Be sure to read multiple reviews and get several quotes from life insurance companies so you can compare the premiums and details of the life insurance plan. Do keep in mind that life insurance purchased from other organizations will go through an underwriting process and the insurance company will assess your health, age, and other factors before finalizing your premiums.
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About Ryan Guina
Ryan Guina is The Military Wallet’s founder. He is a writer, small business owner, and entrepreneur. He served over six years on active duty in the USAF and is a current member of the Illinois Air National Guard.
Ryan started The Military Wallet in 2007 after separating from active duty military service and has been writing about financial, small business, and military benefits topics since then. He also writes about personal finance and investing at Cash Money Life.
Ryan uses Personal Capital to track and manage his finances. Personal Capital is a free software program that allows him to track his net worth, balance his investment portfolio, track his income and expenses, and much more. You can open a free Personal Capital account here.
Featured In: Ryan’s writing has been featured in the following publications: Forbes, Military.com, US News & World Report, Yahoo Finance, Reserve & National Guard Magazine , Military Influencer Magazine, Cash Money Life, The Military Guide, USAA, Go Banking Rates, and many other publications.