In a move that hasn’t happened since 2005, a recent cost-of-living increase to Servicemembers’ Group Life Insurance (SGLI) has given the military community more coverage flexibility. Prior to March 1, service members were eligible for only $400,000 of coverage, which would pay out to their beneficiaries if they died while on active duty. Now, that upper limit has been increased to $500,000.
“We often underestimate the value of our income,” says Heather Walrath, AFC, lead education presenter and military benefits liaison for Navy Mutual. “Income provides support for family members, pays a mortgage or rent and provides a way to fund your future hopes and dreams.” But, she adds, should you die, your income does, too.
“Life insurance makes sure your family continues to have the quality of life that you envision,” Walrath said.
That’s why it’s important to note that SGLI coverage limits have recently been raised for the first time in more than 15 years. That additional coverage, she says, is an important benefit for service members.
And, it was long-overdue.
“It was time for an increase,” Walrath said, noting that it took an act of Congress to change the amount of SGLI that was available to service members.
Now, upon entry into the service, each individual is given a $500,000 SGLI policy, with the option of reducing or canceling that coverage. It’s a term policy available for a flat rate, based on the amount elected, that lasts for the duration of that individual’s service, and for an additional 120 days after concluding that service.
If they’re married or have children, the spouse is given a Family Servicemembers’ Group Life Insurance policy of up to $100,000 for a nominal fee; children are provided a no-cost $10,000 policy.
But for many, Walrath said, even this increased coverage just isn’t enough. So those service members can obtain policies in addition to their SGLI.
“Many feel the $500,000 life insurance benefit they get from the military is enough to provide for their families,” Walrath said. “The reality is that, for many people, it’s not. Service members
need to assess their current situation and decide if the benefits their family would get if they passed away on active duty would be enough to provide financial security. If not, they should be encouraged to get additional life insurance.”
Understanding SGLI eligibility
However, she also said it’s important to ensure that additional policies don’t have military exclusions or “exclusions for hazardous activities they may take part in as a result of their service.”
While many commercial insurers may have these restrictions, Navy Mutual’s policies do not.
Additionally, many don’t realize that they lose SGLI coverage after they separate from service; at that point, they might discover they’re not eligible for additional term insurance coverage, due to age or health considerations.
“While they do have the option to convert their SGLI to Veterans’ Group Life Insurance, VGLI gets very expensive as one ages,” Walrath said. “There are many advantages to getting additional policies while someone is young and healthy, to protect their rate and insurability when the time comes to transition from the military.”
Insurance aside, Navy Mutual offers a number of products and educational resources that anyone can benefit from.
“As a nonprofit Veterans Service Organization, we also have an Education and Veterans Services department that teaches personal finance topics and provides survivor benefits education to military members and their families,” Walrath said. “We also provide veterans and their survivors with assistance applying for their earned VA and DOD benefits. This is an important part of our mission, and certainly makes us different from traditional life insurance companies.”
Walrath also cautions individuals to understand their current death benefits while on active duty: The DOD Survivor Benefit Plan, SGLI, death gratuity, continued health care coverage, and possibly VA benefits.
“I encourage people to use a life insurance needs calculator to assess their current situation,” she said. “If they find they’re underinsured, they should consider shopping around for life insurance while they are young and healthy. And remember, cheapest doesn’t necessarily mean best. The financial rating and customer service of a life insurance company are also very important.”
Navy Mutual started 143 years ago as a way for Navy members to take care of each other, during a time when survivors had limited resources and no pensions.
While the government now offers life insurance and benefits to service members and their survivors, Navy Mutual continues to serve an important niche by providing insurance options for service members and their spouses that can supplement any current benefits and provide a continuation of life insurance coverage once active duty benefits end.
Navy Mutual is the oldest federally recognized VSO and nonprofit and serves all branches of the military as well as officers of the U.S. Public Health Service and NOAA Corps Navy Mutual has calculators to helpmyou determine current active duty death benefits and to assess additional insurance needs, found at https://calculators.navymutual.org/default.aspx.