Do Single Military Members Need Life Insurance
When I was in the military I noticed many of my young squadron mates purchased the maximum amount of life insurance through the SGLI.
The maximum coverage is $27 per month , which is a lot of money to spend when you dont need much, if any, life insurance coverage.
If you are single and do not have any dependents, you can get away without any insurance or only the minimum. You can buy a $50,000 policy for $4.45 per month . A $50,000 policy should be enough to pay off most debts and cover any other expenses.
Remember, military burials are free.
Sgli Beneficiary Designation Rules
Servicemembers can choose their SGLI beneficiaries. In case theres no individual listed as a beneficiary, the payout will go to the widow or widower of the deceased member, then to the children, parents, executor of the estate, and, finally, to other next of kin.
Read more about who receives the death benefits when no beneficiary is designated and learn what you should do when your SGLI claim is delayed due to a beneficiary dispute.
SGLI spouses rights to claim life insurance benefits
If youre a surviving spouse, you are not automatically entitled to SGLI proceeds unless you are designated as the primary beneficiary. You will be notified if youre not.
Read more about the rights of an SGLI spouse to a life insurance payout.
What’s The Difference Between Sgli And Vgli
Both SGLI and VGLI are provided by the Department of Veterans Affairs. SGLI is for active duty military. You are automatically enrolled in SGLI and can increase coverage up to $400,000.
VGLI is for veterans. You are not automatically enrolled in VGLI. You have 240 days after leaving service to opt in to VGLI. This means that if you had $300,000 in SGLI benefits, VGLI will give you the same amount of benefits without requiring you to go through underwriting or prove you’re in good health. If you miss the 240 day period, you have to apply and prove you’re in good health.
Schaffer said that over time VGLI coverage becomes expensive because it increases every five years and by the time veterans are 65 years old, it’s basically unaffordable. This is because although VGLI is a group life policy, it operates similar to an annual renewal term policy.
Annual renewable insurance is relatively cheap if you are young and healthy, but renews each year and becomes more expensive as you age. Schaffer said this works for most servicemembers leaving active duty because the average age exiting service is 25 years old. However, because the rates go up every five years, like other annual renewal term policies, you should eventually switch to a traditional term life policy because you will ultimately end up paying more for VGLI than a traditional term life policy.
*Free if you are totally disabled
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Us Military Life Insurance Lawsuit
In 2010, various media outlets noted allegations that the Prudential Life Insurance Company was manipulating the payout of life insurance benefits due to the families of American service members to gain extra profits. The company provided life insurance to people in the armed forces under a government contract. Rather than paying the full amount due to the families at once, the company would instead deposit the funds into a Prudential corporate account. These accounts are referred to as ‘retained asset accounts’ and are essentially an I.O.U. from the company to the payee . While in early 2010 Prudential was making profits of up to 4.2% in its general account, they paid out 0.5% interest in these non-FDIC insured “Alliance” accounts. In some cases, when families requested to be sent a full payout in the form of a check, the family was sent a checkbook, rather than the amount due.
It is not clear if the practice violated the law or the contract. In August 2010, the company was sued by some bereaved families. The company’s response included an open letter to the military community in which it addressed what it characterized as “misinformation” about the nature of the accounts.Military Times noted that prior lawsuits against insurance companies pertaining to the use of retained asset accounts have been dismissed in federal courts without action.
How To Determine The Right Policy
With so many policy options and acronyms, it can be difficult to decipher the tangled web of VA benefits. That is why Bankrate created this handy guide, breaking down each kind of life insurance policy and who it is best for, so you can find the best life insurance option for you and your family.
|Type of Policy|
|Must convert SGLI coverage before 1 year and 20 days from discharge||Free for 120 days after IRR|
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Five Situations That Indicate A Need For Life Insurance
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.
What Type Of Policy Do You Really Need
Just because you can find a large private insurance policy doesnt necessarily mean its your best option.
You want to consider your specific situation and what is most suitable for you and your family, both now and down the road.
Here are a few considerations to discuss with your spouse or dependents:
If your family is young and your spouse wont be able to support your children in the long term without you, youll want a substantial policy.
If you have no children, and your spouse will be able to work, you might be better served by lower premiums and a more modest life policy.
Get what you need. Nothing more, nothing less.
Jason Fisher is the founder and CEO of BestLifeRates.org, LLC. and a multi-state licensed life insurance agent who has helped over a million Americans seek out affordable coverage, compare quotes, or get their family and businesses covered.
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Buy Term Life Insurance
If you can qualify, that is to say that your overall health is adequate, term life insurance is a popular choice for veterans.
Before applying, determine the following:
- How long do you need coverage?
- What are the financial requirements of your beneficiaries?
- Do you want to add important riders?
- Would you like to skip the medical exam?
There Are Two Main Types Of Insurance Term And Permanent
However, it’s important to understand that there are two types of life insurance that have different products. There are two main types of life insurance policies to choose from: permanent life and term life.
Term insurance lasts for a specified period, and when it’s up you can reapply for coverage, but the premiums most likely will go up as you age and your health deteriorates.
Permanent life insurance has a death benefit for your beneficiaries and a cash value that you can use during your lifetime. It’s like owning a home, where you gain equity that can be used as collateral and your home can be left to your heirs leaving a legacy.
Schaffer said that USAA life insurance offers a benefit for active duty and veterans with coverage equal to their SGLI amount when they apply for individual coverage. “For military members who own a USAA term life insurance policy, we provide a a 360 day window after separation or retirement from military service due to loss of Service members’ Group Life Insurance coverage. This period is extended to 2 years and 240 days in the event of the service member’s medical retirement.”
|Term life insurance|
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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.
Get Options With Aig Direct
If you serve in the military or are about to serve in the military and have you questions about life insurance, AIG Direct is here to help. We can provide you with life insurance options and help you compare SGLI to plans that may make more sense for you and your family. Contact AIG Direct to speak with a representative.
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Converting Sgli To A Commercial Policy
Service members covered under the SGLI program have the option to convert their SGLI coverage to an individual policy of insurance within 120 days from the date of separation from the military. Learn more about converting to a commercial policy. This conversion is an expensive option. The only time this would be beneficial is if you or your spouse would not be able to get reasonably priced fully under-written life insurance coverage. The conversion means you will convert the SGLI term insurance to a whole life policy. We discussed this in a previous article here.
Sgli Options: Traumatic Injury Protection Program
Servicemembers Group Life Insurance Traumatic Injury Protection is an automatic traumatic injury coverage program offered to those already covered under the SGLI program. TSGLI offers short-term financial assistance to severely injured service members and veterans to assist them in their recovery from traumatic injuries, according to the Department of Veterans Affairs.
This type of coverage is for combat injuries but is not limited to them. TSGLI also covers service members for injuries incurred on or off duty.
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Converting Fsgli To A Commercial Policy
Spouses who are insured under the Family SGLI program have the option to convert Spousal Coverage to an individual policy of insurance within 120 days from any of the following events:
- The date of the Servicemember’s separation from the military
- The date of the Servicemember’s divorce from current spouse
- The date of the Servicemember’s election to terminate Spousal SGLI coverage ” rel=”nofollow”> SGLV Form 8286A)
- The date of the Servicemembers election to terminate his/her SGLI coverage ” rel=”nofollow”> SGLV Form 8286)
- The date of the Servicemember’s death.
Spouses covered under Family SGLI may convert their coverage to a commercial policy at standard premium rates, without having to provide proof of good health. The conversion policy must be a permanent policy, such as a whole life policy.
Other types of policies, such as Term, Variable Life, or Universal Life Insurance are not allowed as conversion policies. In addition, supplementary policy benefits such as Accidental Death and Dismemberment or Waiver of Premium for Disability are not considered part of the conversion policy.
If a spouse wishes to convert Spousal SGLI Coverage, the spouse must apply for conversion within 120 days from any of the events listed above and must also:
Ready Reserve Or National Guard Members In Non
You are generally still covered by SGLI if you are a member of the Ready Reserve or National Guard and are:
- scheduled to perform at least 12 periods of inactive training per year, AND
- are drilling for points, rather than pay.
SGLI premium rates are the same as those drilling for pay. However, each branch of service handles payment of premiums during this non-pay period differently. If you are a drilling Reservist or Guard member in a non-pay status and have questions about whether you are covered by SGLI and how to pay your premiums, view our branch of service contact list for the number to call for information.
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After Separation Should You Choose Vgli Or Private Term Insurance
Like SGLI, VGLI is easy for service members to obtain. VGLI also provides fairly substantial benefits with relatively low premiums.
But VGLI isnt usually considered a great choice for long-term coverage.
First of all, VGLI premiums will increase every five years. This is because the premiums are based on your age.
The older you are, the more youll have to pay.
Private term life insurance is often a better deal. Private terms are offered in 5-, 10-, 15-, 20- and even 30-year time periods.
Some companies even offer durations in between, so you can save even more and still get exactly what you require.
You can lock in a great deal for low premiums even if you develop health problems later in life.
Heres an example:
A service member separates from the Army at the age of 25. Shes in good health with no pre-existing conditions.
If she chooses to enroll in VGLI, then her premiums will go up every five years regardless of any changes in her health.
If she chooses private insurance, however, shell be able to purchase a longer term without having to deal with rate changes.
For instance, if she purchases a 30-year term, shell pay a level premium for the entire duration of the policy. This is true even if she develops any type of health issue during those three decades.
Her premiums wont increase until the policy term ends at age 55.
If you decide that private insurance is a better option, youll want to purchase a policy before you cancel your VGLI benefits.
Sgli Traumatic Injury Protection Program
Disability compensation for serious injury and loss of limbs up to $100,000
Automatically provided for all servicemembers carrying any amount of SGLI for $1.00 per month
Military members who totally cancel their SGLI also forfeit this benefit
Provides spouse coverage with a death benefit of up to $100,000
Automatic coverage unless servicemember specifically requests that it be canceled
Premiums determined by the spouses age and increase in 5-year increments
Child covered at no cost with $10,000 of life insurance per child until the childs 18th birthday
Spouse coverage is convertible to commercial permanent insurance within 120 days of servicemembers retirement or separation
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Integrating Sgli Into A Financial Plan
As mentioned, SGLI is an important part of your financial plan but it isn’t the only military and veterans benefit to consider when planning your financial future. For instance, you are also covered by the Survivor’s Benefit Plan , while on active duty and if you select it when you retire from the military. Working with a financial planner that understands your benefits can provide you with a plan that includes and accounts for your unique benefits and situation.
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How Do Service Members Make Changes To Their Sgli
There are a few different ways to make changes to SGLI. Those in an uniformed service can manage their SGLI coverage using the SGLI Online Enrollment System called SOES. Service members can access SOES through their website. They must have full-time SGLI coverage and must not be a part of the Public Health Service.
Those in uniformed service that have part-time SGLI coverage will need to use the SGLV 8286 to make changes. This also applies to those in those in Public Health Service.
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Best For Disabled Veterans: Va Service
VA Service-Disabled Veterans Insurance is a great choice for life insurance for disabled veterans. If you meet certain requirements, you may be able to secure up to $10,000 in life insurance coverage.
Some veterans may be eligible for free coverage
Strict qualification requirements
Getting life insurance for disabled veterans can be tricky. Even though some policies dont require medical exams and have simplified underwriting, there are still medical questionnaires, and you may be denied coverage for certain disabilities, including PTSD. For those who have trouble getting coverage elsewhere, the VA offers insurance for disabled veterans who are in good health . This can help ensure you get life insurance coverage even when other life insurance companies deny coverage.
In some cases, totally disabled veterans may be eligible for free coverage and can purchase additional coverage through the program. The program offers up to $10,000 of coverage and the possibility to increase coverage by up to $30,000 if you become totally disabled and are unable to work.
To be eligible, you must apply within two years from the date the VA grants your new service-connected disability. There are no online quotes, but they offer a brochure with premium and plan options with rates per $1,000 of coverage. You can apply for policies online through your VA online account.
What About Those In The Ready Reserve And The National Guard
Service members in the Ready Reserve or National Guard can still be covered by SGLI. They must be in non-pay status and scheduled to perform at least 12 periods of inactive training per year. They must be drilling for points, rather than pay. The SGLI premium rates are the same as those drilling for pay. Know that each branch of the military does handle payment of premiums during the non-pay period differently.