Frequently Asked Questions About Military Life Insurance
Servicemembers’ Group Life Insurance offers substantial benefits for those on active duty. It provides a high coverage amount, up to $500,000 with government-subsidized monthly premiums. Enrollment is automatic. SGLI guarantees coverage regardless of a servicemember’s health and applies regardless of high-risk military jobs, including serving in combat zones.
This guaranteed insurability is an advantage, as comparable civilian coverage under similar high-risk circumstances could be far more expensive or unavailable. The program’s simplicity and reliability, backed by the government, offer considerable peace of mind to servicemembers and their families.
What are the primary limitations or disadvantages of relying solely on SGLI?
The principal limitation of SGLI is its direct tie to military service; coverage under SGLI terminates when a servicemember separates or retires from the military. While conversion to Veterans’ Group Life Insurance (VGLI) is an option, VGLI premiums are age-based and increase every five years, potentially becoming quite costly over time.
SGLI is also a term life insurance product with no cash value accumulation or policy loan features which may be available with civilian policies. Furthermore, the maximum SGLI coverage, though generous, may not cover all long-term financial needs for every servicemember, particularly those with significant family responsibilities or large debts like mortgages.
Those who do not feel SGLI is enough may consider civilian alternatives, such as the military life insurance options offered by providers such as Navy Mutual.
Is SGLI coverage alone generally enough for a single servicemember?
Whether SGLI alone is sufficient depends on individual circumstances. For a single servicemember with no dependents, SGLI’s maximum benefit may cover immediate obligations (final expenses.)
However, for servicemembers with spouses, children, mortgages, or long-term income replacement needs for their families, the $500,000 SGLI benefit, while helpful, may fall short of providing comprehensive, lasting financial security. Many financial planning guidelines suggest life insurance coverage that is several multiples of annual income, which could exceed the SGLI cap.
What types of long-term financial needs for families might SGLI not fully cover?
While substantial, SGLI’s maximum death benefit might not fully cover a family’s extensive long-term financial needs. These can include replacing the servicemember’s income for potentially decades to support a surviving spouse and children, fully paying off a long-term mortgage on a family home, covering the complete costs of college education for multiple children, or settling significant outstanding debts beyond basic consumer loans.
It also doesn’t account for future financial goals the family might have had, which relied on the servicemember’s continued income.
Why should a servicemember consider obtaining additional civilian life insurance?
Additional civilian life insurance should be considered for several reasons. It can bridge the potential gap if SGLI’s maximum coverage isn’t enough to meet long-term financial needs such as paying off a home loan, funding children’s college education, or replacing income for many years.
Securing a civilian policy while young and healthy can lock in lower premiums for an extended term (e.g., 20 or 30 years) or even for life, offering cost stability that VGLI doesn’t provide. Civilian policies are also portable; they remain in force regardless of military status, offering continuous coverage after separation or retirement. Finally, civilian insurance offers a broader range of products, including policies that build cash value, which can become a financial asset.
Are there any situations where relying only on SGLI might be considered preferable?
Relying solely on SGLI might seem preferable for servicemembers with limited financial obligations, such as those who are young, single, and have no dependents or significant debts. In these cases, the coverage amount of SGLI relative to its cost provides value for covering final expenses or minor debts.
The simplicity and automatic nature of SGLI are also appealing when complex financial planning isn’t a primary concern. The “preferable” aspect here relates to its cost-effectiveness and sufficiency for immediate, more limited needs during the service period itself.
If SGLI alone can be preferable in some specific, limited cases, why is it often not recommended as the sole long-term solution?
Even when SGLI seems adequate for a servicemember’s current, limited needs, it’s often not recommended as a sole long-term solution due to future uncertainties and the nature of SGLI itself. A servicemember might develop health conditions during their service that could make civilian insurance much more expensive or difficult to obtain after separation.
Relying only on SGLI means facing the transition to VGLI, which has age-banded premium increases that can become a financial burden later in life. Comprehensive financial planning typically looks beyond the immediate term. SGLI, being tied to service, doesn’t inherently provide for post-military life or evolving family and financial responsibilities as effectively as a long-term civilian policy secured early.
How does transitioning from SGLI to Veterans’ Group Life Insurance (VGLI) impact the decision to get civilian insurance?
While VGLI allows servicemembers to continue their life insurance coverage post-service without medical underwriting for a limited period after separation, its premium structure differs from SGLI. VGLI premiums increase with age in five-year brackets, meaning the cost will rise over time and may become more expensive than SGLI, or more than a civilian term policy secured at a younger age.
This potential for escalating costs with VGLI makes obtaining a civilian policy with level premiums during active service an attractive option for long-term affordability and predictability.
What benefits do civilian life insurance policies offer that SGLI does not?
Civilian life insurance policies can offer several benefits not found in SGLI. These include a wider variety of policy types, including those that build cash value over time.
This cash value can be borrowed against or withdrawn. It may also supplement retirement income, functioning as a financial asset. Civilian policies can also offer longer guaranteed level premium periods (e.g., 20, 30 years, or lifetime), providing cost predictability. Furthermore, riders can often be added to civilian policies for benefits like critical illness coverage or waiver of premium for disability, offering more customized protection. Most importantly, they are not tied to military service.
What is the general advice from .mil and .gov resources regarding SGLI and supplemental insurance?
Official military and veterans’ affairs resources consistently highlight SGLI as an excellent and foundational benefit for servicemembers due to its low cost and high coverage during service. However, they also frequently advise servicemembers to conduct a thorough assessment of their individual and family financial needs.
This includes considering factors like income replacement, dependent care, mortgage and debt obligations, and future education expenses. Based on this personal needs assessment, the guidance often suggests that servicemembers explore supplemental civilian life insurance to ensure comprehensive and continuous coverage that extends beyond their military career and sufficiently meets all their long-term financial objectives.
About the author
Editor-in-Chief Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter/editor for Air Force Television News and the Pentagon Channel. His freelance work includes contract work for Motorola, VALoans.com, and Credit Karma. He is co-founder of Dim Art House in Springfield, Illinois, and spends his non-writing time as an abstract painter, independent publisher, and occasional filmmaker.
