January 08th, 2022
Your service in the military could affect your life insurance options, but coverage is not out of reach. Because you are inherently placed in higher-risk situations due to the nature of the job, carriers have specific underwriting criteria based on your experience in the armed forces. Everything you need to know about buying military life insurance is available here for active duty and veterans, including underwriting concerns and the best companies to apply with.
Military life insurance:We know that in your busy life you have friends and family you want to protect, but haven’t had time to do so. Recently, a friend told us that they’d recently remarried and they had a baby on the way. They felt very much like this was going to be their last chance to make sure their loved ones were taken care of after they were gone and that it wasn’t something they wanted to put off any longer. Well, we’re here to tell you that these feelings are common – many people in our society worry about getting around to this, or simply assume it can’t be done. We think you deserve more information than that!
● Veteran or active duty service member
When on active duty:In order to determine what type of life insurance they need, military members should consider the following seven items.
As a benefit of serving in the military, the following financial protection measures are provided:
● Family SGLI
● Death Gratuity
● Surviving Beneficiary Plan
As for the second point, many members of the military should consider additional life insurance coverage options:
● Factors to consider when underwriting service members
● An insurance policy for term life
● A full life insurance policy
1. SGLIIn most cases, life insurance coverage for active duty military members is automatically provided through SGLI, or Servicemembers' Group Life Insurance.
The U.S. Department of Veterans Affairs offers low-cost term insurance to eligible service members under Servicemembers' Group Life Insurance (SGLI).
What services does SGLI provide?A SGLI policy provides the following benefits:
● Up to $400,000. Coverage in $50,000 increments
● 120 days of free coverage upon separation from the military
● If you're totally disabled, your coverage may be extended for up to two years
● If your Reserve status does not qualify you for full-time coverage, you can choose part-time coverage
Can I qualify?Most do.
You must be one of the following to apply to the Department of Veterans Affairs:
● Served in the Air Force, Army, Coast Guard, Marine Corps, or Navy or
● Served as a commissioner of the National Oceanic and Atmospheric Administration or the U.S. Public Health Service
● Academi or midshipmen of an American military academy or college
● Students or cadets enrolled in Reserve Officers Training Corps training, or midshipmen engaged in authorized training
● The Ready Reserve or the National Guard is a member of a unit responsible for participating in at least 12 periods of inactive training per year
● Mobilize the Individual Ready Reserves as a volunteer
What is the cost of SGLI?Automatic deductions from your base pay cover your insurance premiums. Consider the following rates as a general guide:
The Traumatic Injury Protection (TSGLI) coverage is an extra $1 per month with SGLI.
Is SGLI sufficient?Usually, it isn't.
The Service Members' Group Life Insurance policy is a good automatic life insurance plan, but it is advisable to conduct a needs assessment to determine if $400,000 will cover the needs of your loved ones.
● Getting a mortgage
● Having debts (e.g., credit cards, auto loans)
● Groceries, utilities, and other living expenses
● Fees for dependent college students
If you investigate additional coverage choices, you will likely discover that it makes sense to do so.
2. SGLI for familiesAs part of the Family Servicemembers' Group Life Insurance (FSGLI), members who have SGLI coverage for themselves and their spouses may purchase coverage for their dependent children.
FSGLI offers what?FSGLI policies provide the following benefits:
● Spouses are covered up to $100,000
● Children under age 18 are covered for free for a total of $10,000
Does FSGLI apply to everyone?You and your spouse will automatically be enrolled in FSGLI if you were married before January 2, 2013, if you are enrolled in a full-time SGLI policy and you have a civilian spouse.
On or after January 2, 2013, you will need to enroll yourself and your spouse if you were married on or after that date. Children with dependents are automatically covered.
Cancellation, reduction, or decline of this coverage is not allowed. - Veterans Affairs Department.
3. Gratuity upon death
SGLI is not the only benefit provided by the Department of Defense.
A $100,000 lump sum payment is intended to provide immediate financial assistance to surviving family members in the case of the death of a spouse or parent.
The gratuity is subject to specific requirements. For example, death must be caused by one of the following conditions:
During active duty
Serving in a reserve status
The death gratuity is not affected by the cause of death.
Furthermore, the death gratuity is payable if the deceased was injured or died as a result of the injury or illness contracted on active duty within 120 days of release or discharge.
A survivor may be designated by active duty members at any time. This includes:
● Surviving children
● Administrator or executor of the estate
● It is possible to divide a gratuity payment by 10% increments.
● The next of kin
4. Benefits for survivors:The Department of Defense also offers a plan called the Survivor Benefit Plan (SBP).
Upon death of an eligible service member, beneficiaries can receive up to 55% of the member's retired pay.
The following beneficiaries are eligible:
● Former spouse
● Spouse and children not included
● There are no spouses, only children
● Interest that is insurable
Someone can demonstrate that they have suffered a financial loss due to your death if you become uninsured.
Survivor Benefit Plans (SBP) are lifetime annuities that pay a beneficiary a monthly income with inflation adjustments over the course of their lifetime.
5. Underwriting criteriaThere are several factors that you should consider when applying for life insurance coverage beyond what is offered through the military, as many do.
A life insurance company's underwriting process involves assessing how much a policy is going to cost based on an applicant's risk profile.
The type of insurance you want and the carrier you choose may require you to answer the following questions:
● How would you describe your specific job title and responsibilities?
● What kind of combat or hazardous situations will you be faced with?
● Do you belong to any special operations forces?
● Do you have orders for deployment or are you currently deployed?
A life insurance policy may contain financial protection clauses to protect the firm's solvency. War exclusion clauses vary from carrier to carrier; however, they usually state that death benefits are ineligible to be paid if a war or terrorist act was the cause of death.
Despite some underwriting red flags, active duty military personnel can still find coverage. If you want to obtain military life insurance, it is best to deal with an independent agent who has extensive contacts with carriers.
6. Choices for term life insuranceIn addition to what is inherently offered by their service, military members typically look for term life insurance.
Why? You get the best return on investment with a term.
Your family can be protected during the time when they need it most with a large face amount and affordable premiums.
Policies with a term expire after a specified period of time. You should choose a plan that lasts so long as your loved ones still depend on you (for example, until your children are grown).
● Term of 10 years
● Term of 15 years
● Term of 20 years
● Term of 30 years
● Term of 40 years
7. The whole life insurance optionPurchasing a policy that will not expire makes sense for some people. No matter when you die, whole life insurance will pay a death benefit if you pay your premiums.
● A whole life insurance policy consists of the following components:
● Inexpensive compared to term
● Option for policy loans
● Option to withdraw from policy
● Protection for life
Members of the armed forces can purchase a whole life insurance policy on active duty in the same way as term.
It is advisable to work with an independent agent if you belong to a military branch because some carriers offer better coverage for military members.
Life insurance's main objective is to provide financial security to those who need it. This requires purchasing additional coverage beyond that provided by the military.
Veterans:You should revisit your life insurance needs and options as soon as you separate from the military. A reminder that military life insurance isn't portable, and is only available via SGLI. Is that what you mean? You cannot continue to be covered by your SGLI policy once you separate from the military. Furthermore, SGLI policies are convertible to other forms of insurance. Veteran life insurance is still available through the military's conversion options. Additionally, it may be an advantage to combine military and private coverage for veterans.
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