Similar to many other benefits received by members of our nation’s armed forces, eligible members of certain armed forces divisions are able to acquire a more affordable form of life insurance known as Servicemembers’ Group Life Insurance (SGLI). This low-cost alternative to standard life insurance policies allows provides coverage to individual military members that may not be able to get coverage otherwise due to the risks associated with their line of work. While many individuals in or out of the military may familiar with this type of life insurance, there are still many clients of ours that do not understand the coverage. That being the case, let’s take some time to breakdown this particular group coverage.
This program available to service members is a term life insurance policy. This means that the coverage lasts for a certain period of time, rather than for their whole lifespan regardless of length. If service members are eligible for the coverage, they are generally automatically enrolled without needing to apply for coverage and are given the maximum coverage. While the members are able to make changes to the coverage at a later point in time, the fact that they are automatically enrolled is a nice plus. Some of the changes members of the group can make are declining coverage at any later point in time, lower the amount of coverage, change beneficiaries and adjust contact information on the policy.
Eligibility for Coverage
While this coverage is available to many service members of the military, it is important to understand who is actually eligible for the coverage. To be clear, those that are eligible for the coverage are automatically insured for the full amount. In order to be eligible, a service member must meet the following requirements:
- Be an active duty member for Air Force, Army, Coast Guard, Navy or Marines
- Be a commissioned member for the National Oceanic and Atmospheric Administration or the U.S. Public Health Service
- Be a cadet, member or midshipman for the U.S. military academies or the Reserve Officers Training Corps (ROTC)
- ROTC qualification applies if member is engaged in authorized training and practice cruises
- Be a member of the Ready Reserve or National Guard
- National Guard member must be scheduled to perform at least 12 periods of inactive training per year to qualify for coverage
- Or be a service member volunteering for a mobilization category in the Individual Ready Reserve
Breakdown of Coverage
As previously mentioned, those that qualify for the coverage are automatically enrolled for the maximum amount. That maximum amount is $400,000.00 USD. While this coverage amount can be adjusted, the adjustment can only be in increments of $50,000.00 USD. Part-time coverage is provided under certain circumstances as well. Some might wonder why members would choose to stick with anything less than the maximum amount. To be clear, members will still have a monthly premium deducted for this coverage. Just because they are automatically covered does not mean it is completely free here. If an individual does not believe they need the full coverage amount, they may choose to go with a lower amount so as to have a smaller portion of their base pay deducted each month. Members can consult the appropriate resources for SGLI coverage to decide on the coverage amount and premium to be deducted.
Now those leaving the service may be worried about their continued coverage. In general, the SGLI coverage will extend for 120 days (about 4 months) after the date a service member separates from a qualified branch. This provides some relief time to get separate coverage if needed. There is also the option to extend the coverage for a full two years if the member is totally disabled at separation. It is important to take note of the timing of disability and separation here so as to not rely on a false sense of security for coverage if it does not apply to the member in question.
In particular, beneficiaries of a SGLI policy are the ones that often approach our firm with questions. By understanding the elements of such a policy, these clients can better understand how and when they are able to collect on the policy. If you are dealing with a loved one that was insured by such a policy and have questions or fighting through a denied claim, feel free to reach out to a trusted legal team to help you in your time of need.