Protection At A Bargain Price
By Robert D. Gifford
Fall 2008
Benjamin Franklin once said that nothing is certain but death and taxes. When that first certainty occurs, members of our military are eligible for a unique low-cost group life insurance secured more than 40 years ago.
Today, Servicemembers Group Life Insurance (SGLI) covers some 2.4 million military members plus nearly three million spouses and children. It is available to members of the armed services, including Reservists, Guardsmen, cadets and midshipmen of the service academies, as well as commissioned officers of the Public Health Service and National Oceanic and Atmospheric Administration.
The servicemember automatically is insured under SGLI for a maximum amount of $400,000, unless an election is filed to reduce the insurance by $50,000 increments or cancel it entirely.
Effective July 1, SGLI now costs a mere 6.5 cents per month per each $1,000 of coverage. Monthly premiums for servicemembers with the maximum coverage are reduced from $28 to $26, plus a mandatory $1 charge for traumatic injury protection (TSGLI) and financial assistance that enables loved ones to stay with the member during an injury recovery period. This coverage ranges from $25,000 to $100,000, depending on the nature of the injury.
Spouse coverage, up to $100,000 (the same amount as the military member if the member elects coverage of $100,000 or less), is automatic unless the member declines it. Each dependent child of the servicemember automatically is covered up to $10,000. If the servicemember elects coverage for an amount less than the maximum, federal law requires spousal notification to prevent any injustices and provide opportunities for optional planning.
It is worth noting that the servicemember reserves sole discretion in choosing his or her SGLI beneficiary; a family member cannot prevent the financial disbursement from going elsewhere if it was the military member’s decision. On the other hand, a family member is not entitled to the same discretion; the servicemember is the beneficiary of the spouse’s and child’s policy.
Since any designation is binding, the military member must take the time to ensure that his or her SGLI policy always is updated to reflect current circumstances. For example, an ex-girlfriend could be awarded payment in lieu of a spouse if the military member failed to update his SGLI designation.
The myth persists that legislation entitles dividends to be paid on SGLI regardless of whether the insurance remains in effect. Indeed, some advertisements offer free assistance in obtaining the dividend, but this is often only a sales pitch for other commercial life insurance policies. In fact, federal law dictates that SGLI does not pay dividends and is not assignable.
If you are considering declining SGLI in favor of using only a commercial insurance policy, understand that many commercial policies contain a "war clause" or "military service exclusion" that excludes coverage for death caused by “acts of war.” Unlike these commercial policies, SGLI covers all servicemembers in the event of death due to an “act of war.”
Unlike private group life policies, SGLI cannot be divided by state courts, so divorce decrees or separation agreements have no effect on original designations. Congress was clear that SGLI disbursements “shall not be liable to attachment, levy or seizure by or under any legal or equitable process whatever, either before or after receipt by the beneficiary.”
With few exceptions, coverage is continuous every day regardless of duty status, and premiums automatically are deducted from military pay. Among the exceptions, military members may lose entitlement to SGLI if the death occurs during extended absence without leave (AWOL), while serving a term of confinement, refusing to continue service due to “conscientious objector” status, or following the conviction of certain serious crimes. Short of foul play, however, cause of death is not relevant to the payment of SGLI proceeds. Coverage also continues for four months following release from military service, and no premiums are required during this additional period.
Especially during times of deployments and mobilizations, SGLI can provide some peace of mind for those who have, in the words of Abraham Lincoln, “borne the battle.” To obtain more information about VA-managed insurance programs, visit www.insurance.va.gov or call 1-800-419-1473.
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Maj. Robert D. Gifford is an Army Reserve Judge Advocate serving as an adjunct professor of military law at the Judge Advocate General’s Learning Center and School in Charlottesville, Va. In his civilian capacity, he serves as a federal prosecutor in
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For Veterans Too!
Veterans Group Life Insurance (VGLI) provides renewable term policies for military members after discharge. Veterans pay premiums according to their ago. Effective July 1, VGLI premium rates dropped for veterans age 30 to 64, who make up 85 percent of those insured under the program. Premium reductions, ranging from four percent to 12 percent, are a result of receiving fewer claims. Some 433,000 veterans currently participate in the program.
