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Losing Military Life Insurance

Joe Wallace

For members of the armed forces, programs like Servicemembers’ Group Life Insurance (SGLI) are an important part of the larger package of military benefits, providing high levels of coverage with no required medical exams or high premiums.

But military life insurance is not necessarily a lifetime benefit, and there are numerous circumstances under which it can be reduced, terminated, or lost entirely.

The short answer to the question, “Can I lose my military life insurance?” is a definitive yes. This coverage loss is often planned and predictable, typically tied to a service member’s transition out of the military.

You may risk losing certain types of military life insurance due to specific actions or changes in status. Understanding the rules of SGLI, Veterans’ Group Life Insurance (VGLI), Family SGLI (FSGLI), and Traumatic Injury Protection (TSGLI) is vital for the most comprehensive financial planning and protection for your family.

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Losing Servicemembers’ Group Life Insurance (SGLI)

SGLI is the primary life insurance program for active duty, reserve, and National Guard members. It offers up to $500,000 in protection, and SGLI premiums are automatically deducted from the service member’s pay.

This coverage is designed to be in effect while the member is serving, and eligibility for it is directly linked to military service status.

You lose SGLI when you retire or separate from the military. Service members are granted a free 120-day extension of their SGLI coverage when they leave active duty. It’s a “grace period” to ease the transition out of uniform and to arrange for new life insurance, whether through the government or a private company.

After the 120-day grace period, SGLI officially terminates.

There are less common ways in which SGLI coverage can be lost even while technically still affiliated with the military, if one of the following applies:

• AWOL Status: If a service member is absent without leave (AWOL) for more than 31 days, their SGLI coverage may be terminated.
• Confinement: Should a service member be confined by civilian authorities for more than 31 days or be sentenced to death or confinement for life, their SGLI coverage will cease.
• Treason, Mutiny, and Desertion: Conviction for serious offenses such as treason, mutiny, spying, or desertion will result in the forfeiture of SGLI coverage.
• Conscientious Objection: If a service member refuses to perform service or wear the uniform due to conscientious objection, and this refusal results in a dishonorable discharge, their SGLI coverage will be terminated.

For those who are totally disabled at the time of their separation, there is an important provision called the SGLI Disability Extension. This allows for up to two years of continued, free SGLI coverage. To be eligible, the veteran must have a disability that prevents them from employment. At the end of this two-year period, the coverage will automatically convert to VGLI, and the veteran will be responsible for paying the premiums.

Veterans’ Group Life Insurance (VGLI)

VGLI is the government-sponsored life insurance program for those who want to continue their military life insurance coverage after serving. According to VA.gov, “You can get between $10,000 and $500,000 in term life insurance benefits. The amount you’ll get will be based on how much SGLI coverage you had when you left the military.“

Your existing SGLI policy is coverted into a renewable term life insurance plan. While VGLI offers the significant advantage of guaranteed acceptance if you apply within 240 days of separation, it is not a benefit you can hold onto without action, and it can be lost.

Otherwise, the main way to lose VGLI coverage is through non-payment of premiums. Unlike SGLI, which is automatically deducted from your pay, VGLI requires you to make regular premium payments. If these payments lapse, your policy will be terminated. While you can apply for reinstatement, you may be required to provide evidence of good health, and there is no guarantee of approval.

The cost structure of VGLI can lead to its forfeiture. VGLI is an annually renewable term policy, and the premiums increase with age, in five-year brackets. For a young, healthy veteran, VGLI can be a competitive option. However, as a veteran ages, the premiums can become larger. If the cost becomes unaffordable, the veteran may be forced to let the policy lapse, effectively losing their coverage.

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Family Servicemembers’ Group Life Insurance (FSGLI)

FSGLI is life insurance coverage for the spouses and dependent children of service members protected by SGLI. Spousal coverage can be up to $100,000 (but not exceeding the service member’s SGLI amount), and dependent children are automatically covered for $10,000 at no cost.

The most important thing to understand about FSGLI is that it is entirely dependent on the service member’s SGLI coverage. If the service member reduces or cancels their SGLI, the FSGLI coverage for their spouse and children is also terminated.

Upon the service member’s separation from the military, the FSGLI coverage, like SGLI, continues for a free 120-day period. After this, the coverage ends. However, the spouse can convert their FSGLI coverage to an individual whole life policy with a participating commercial insurance company.

This conversion must be done within 120 days of the service member’s separation, but it offers the advantage of not requiring proof of good health. The coverage for dependent children, however, cannot be converted.

FSGLI coverage can also be lost due to specific life events:

• Divorce: In the event of a divorce, the former spouse’s FSGLI coverage is terminated.
• Spouse’s Age: Spousal coverage ends when the spouse turns 65.
• Child’s Age: Coverage for a dependent child typically ends when they turn 18. However, it can be extended to age 23 if the child is a full-time student, or indefinitely if the child became permanently incapable of self-support before their 18th birthday.

Traumatic Injury Protection (TSGLI): A Living Benefit, Not a Death Benefit

TSGLI is not a life insurance policy in the traditional sense; it is a “living benefit” or an insurance rider that is automatically included with SGLI. According to VA.gov, “You may get $25,000 to $100,000 in short-term financial support to help in your recovery from a traumatic injury.“

Because TSGLI is a part of SGLI, its coverage is also lost when SGLI is terminated. If a service member separates from the military, their TSGLI coverage ends. The benefit is designed to provide financial support during the recovery from a traumatic injury sustained while in service.

The “loss” of a TSGLI benefit would most likely occur if the injury does not meet the strict criteria outlined in the schedule of losses. The program has very specific definitions for qualifying injuries, such as limb amputation, loss of sight or hearing, paralysis, and severe burns. If a service member’s injury, while serious, does not meet these specific criteria, their claim for a TSGLI payment will be denied.

Appealing a Denial of Benefits

• If a claim for military life insurance benefits is denied, or if you believe your coverage has been wrongfully terminated, there is an appeals process.
• File a formal appeal with the Office of Servicemembers’ Group Life Insurance (OSGLI), which administers these programs on behalf of the Department of Veterans Affairs (VA).
• If the appeal with OSGLI is unsuccessful, appeal to the VA.
• Common reasons for denial include beneficiary disputes (where multiple people claim to be the rightful beneficiary), eligibility issues, clerical errors in paperwork, or a failure to convert a policy within the required timeframe.
• These programs are subject to the complexities of federal law and the specific regulations governing these programs. It is often a good idea to get the assistance of a VA-accredited representative or attorney to help you navigate VA claims and appeals.

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