You may have heard of Servicemembers’ Group Life Insurance (SGLI). Here we will discuss key definitions commonly used in life insurance policies, who the SGLI is for, and its purpose as it relates to servicemembers and their families.
In this article, some technical terms are going to be used while discussing life insurance. Let’s break down some of these terms to better understand their meaning in regard to life insurance, specifically the SGLI.
The SGLI is what is called a “term” life insurance policy, meaning that coverage is for a specific length of time, or term. In this instance the term is typically the time the servicemember is eligible for SGLI, in most instances this is the length of time that is going to be served on active duty, but there are some exceptions. Upon creation, SGLI coverage was only for active-duty members of the various branches in the U.S military; however, it has since been expanded to allow cadets of various U.S. military academies, Reserve Officers Training Corps (ROTC) cadets actively engaged in training, and members of the National Guard or Ready Reserve, that are assigned to a unit and are scheduled to perform at least 12 periods of training per year.
With term life insurance policies there is what is called a “death benefit.” This is the amount of money that will be paid out in the unfortunate event of the servicemember’s death. The amount of SGLI coverage, or the “death benefit,” can range from $0 in the event the servicemember denies coverage, all the way to the upper limit of $400,000. The amount of coverage can be adjusted by the servicemember in increments of $50,000, from $0-$400,000.
In the event of death, this death benefit will be paid to the listed “beneficiaries” on the servicemember’s SGLI policy. A beneficiary is any legal entity that is selected by the servicemember for the death benefit payout and is listed on the servicemembers SGLI policy. Beneficiaries are typically a person or persons, but can include a church, trusts, corporations, or even a charity of the servicemembers choosing. The payout the beneficiary will receive in the event of the servicemember’s death can be adjusted from 1-100% of the total payout.
“A servicemember lists their spouse, and their sibling, as beneficiaries on their policy with the maximum coverage of $400,000 selected. The servicemember has identified that 50% of the payout should go to their spouse, and 50% should go to their sibling. The spouse would receive $200,000, and the sibling would receive $200,000 in the event of death of the covered servicemember.”
The “premium” is the payment required to keep the coverage, or payout, in effect. This is typically set up on a monthly, or yearly basis; in the case of SGLI, the premium is taken out of the servicemember’s base pay on a monthly basis. The premium rate, or the amount the servicemember will pay per month, is based on the amount of coverage they select. As of July 1, 2019, the rates are as follows:
As you can see, the SGLI premiums are quite reasonable. They range from $3.00/month for $50,000 of coverage, to only $24.00/month for the maximum amount of coverage at $400,000.
In most instances, if you qualify for the SGLI, you will be automatically enrolled. However, to change beneficiaries, increase or decrease coverage amounts, or decline coverage outright; you will need to logon to the Milconnect website, go to Benefits, Life Insurance SOES-SGLI Online Enrollment System, and make the necessary adjustments as they pertain to you.
When selecting the coverage amount it is important to identify why you are doing so. As stated previously, you can adjust the SGLI coverage amount on the MilConnect website at any time, but it is important to be realistic about why the coverage is needed in the first place, and what amount might be necessary to assist loved ones.
After all, this is a life insurance policy, and is meant to ensure that your loved ones are not saddled with massive costs and even debt in the unfortunate event of one’s death. Upon the loss of a major breadwinner, loved ones need time and options to figure out the next course of action. A lump-sum payment to beneficiaries ensures that they have that crucial time to get their affairs in order. This payout can ensure children have money for school, spouses have money for mortgage payments, and that food continues to be put on the table.
You can find more information about the SGLI in the milConnect portal here.