Military life insurance
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If you’re one of the 1.3 million Americans active in the military, then you have access to specialized life insurance programs designed for U.S. service members.
Military life can be dangerous, and military life insurance is created to account for the heightened risk that comes with this service. These programs are open to people serving in the Army, Navy, Marines, Air Force and Coast Guard.
We’ll walk through the different life insurance programs available to those who serve in the military and which one will best fit your needs.
How does military life insurance work?
Servicemembers’ Group Life Insurance (SGLI) is a form of military life insurance offered by the U.S. Government. Most active members of the military will qualify for SGLI. Service members are automatically enrolled in a maximum of $400,000 coverage through their respective military branches.
Although the SGLI sign up is automatic, service members can choose to reduce the life insurance program’s benefits or opt-out of the program altogether. However, we recommend keeping at least some form of the SGLI program intact.
“SGLI is a commercial insurance product. It’s purchased. They pay premiums. They assign beneficiaries. It’s something that [service members] should manage as part of their financial portfolio. The money is coming out of their paycheck,” says Bonnie Carroll, president and founder of Tragedy Assistance Program for Survivors (TAPS) which provides support for the families of deceased service members.
Life insurance policy types
Life insurance policies are divided into term life and whole life policies.
Term life policies pay a lump sum after the policy owner’s death if the death occurs within the policy’s term. Term life premiums do not change and are lower than whole life premiums.
Whole life insurance policies also pay a lump sum upon the policyholder’s death. These policies are also used as investment tools, and policyholders can even take loans against whole life policies. The premiums are more expensive and may vary based on factors like age, health or available investment options.
Whole life insurance
Whole life insurance policies come in a few different variations:
- Variable life insurance offers a death benefit, as well as tax advantages. Premiums accrue in a tax-free account that is then invested on the policyholder’s behalf, and the death benefit is based on the earned value of these investments over time. This cash value can also be borrowed against prior to death.
- Universal life operates similarly, but splits premium payments into investment funds and cash accounts that accrue interest. These are also tax-free and may be a source of loans.
- A variable universal policy, while more expensive, combines these features and also allows policyholders to control how funds are invested.
Term life insurance
Term life insurance policies can also vary, such as:
- Mortgage life insurance is a policy that, upon your death, assures your home mortgage is paid off. No other death benefit is paid to beneficiaries.
All branches of the military recognize that some military-specific life insurance policies may contain exclusion clauses that apply to service members. For example, warzone exclusions are common.
Fortunately, active military and retired veterans have life insurance options that are exclusively available to members of the armed forces.
Life insurance options for military families
- Servicemembers’ Group Life Insurance (SGLI) may be purchased by any active duty military, members of Reserves and ROTC, and other groups such as employees of the U.S. Public Health Service (PHS) and the National Oceanic and Atmosphere Administration (NOAA).
- Veterans Group Life Insurance (VGLI) offers a natural transition from an active duty policy to a retired veteran’s policy. VGLI and SGLI both serve group policies in which the enrollees collectively keep premiums low.
- The American Armed Forces Mutual Aid Association (AAFMAA) offers a range of insurance terms and policies for all five military branches who are active duty, reservists, or retired service members. ROTC members may also purchase an AAFMAA policy under certain provisions.
- The Navy Mutual Aid Association (NMAA) offers a selection of life insurance and financial planning tools to active and retired military. Contrary to the name, these policies are not restricted to Navy service members; Army, Marines, and Coast Guard personnel, as well as employees of the PHS and NOAA, are also welcome.
While life insurance needs should be evaluated with specific families in mind, it is generally true that insurance policies offered by one of these entities will most likely serve the needs of soldiers.
Life insurance options for veterans
The first option veterans should consider is VGLI, which is designed as a continuation of SGLI for veterans. This program offers maximum coverage of $400,000, which is split up in $50,000 increments. If the premium for the maximum coverage is too high, you can buy a lower amount.
To qualify for VGLI, you must submit an application to convert your SGLI to VGLI within one year and 120 days of discharge. And if you apply within 240 days of discharge, you won’t need to take a medical exam or prove insurability.
To learn more, check out the U.S. Department of Veterans Affairs page. It details what veterans should consider when looking into VGLI after discharge.
Life insurance options for active duty military
The first option active duty service members should consider is SGLI, the military life insurance policy that’s offered by the government. Active duty military personnel are automatically enrolled in SGLI for the maximum coverage limit.
The U.S. Department of Veterans Affairs provides the following criteria to be eligible for SGLI coverage:
- An active-duty member of the Army, Navy, Air Force, Marines or Coast Guard
- A commissioned member of the National Oceanic and Atmospheric Administration (NOAA) or the U.S. Public Health Service (USPHS)
- A cadet or midshipman of the U.S. military academies
- A member, cadet or midshipman of the Reserve Officers Training Corps (ROTC) engaged in authorized training and practice cruises
- A member of the Ready Reserve or National Guard, assigned to a unit and scheduled to perform at least 12inactive training periods annually
- A volunteer in an Individual Ready Reserve (IRR) mobilization category
However, some members of the military may want more traditional life insurance. There are organizations that specialize in offering life insurance policies to the military. Two of the most popular organizations are USAA and Armed Forces Insurance, both of which are good life insurance options for U.S. service members.
Which option is best for me?
Each insurance plan tailored for military personnel and their families has benefits and restrictions that should be weighed against family variables. It is good practice to examine the fine print when choosing the policy that will best benefit survivors in the event of a soldier’s death.
Here’s the coverage and eligibility breakdown for each military life insurance program:
Servicemembers’ Group Life Insurance (SGLI)
Eligibility – Anyone may apply who is: an active-duty member of the Army, Navy, Air Force, Marines or Coast Guard; a commissioned member of the National Oceanic and Atmospheric Administration (NOAA) or the U.S. Public Health Service (USPHS); a cadet or midshipman of the U.S. military academies; a member of the Reserve Officers Training Corps (ROTC) engaged in authorized training and practice cruises; a member of the Ready Reserve or National Guard or a volunteer in an Individual Ready Reserve (IRR) mobilization category.
Coverage – Death benefits up to $400,000 may be purchased for individuals, and spousal coverage of $100,000 and dependent coverage of $10,000 per child may also be added. An additional layer of protection can be added for $1, which helps service members and their families in the event of traumatic injury. And of course, there is no war zone exclusion. Policies are priced at 65 cents per $1,000 of benefits. Upon retirement, SGLI policy benefits may be transferred to a commercial life insurance policy or VGLI.
Servicemembers’ Group Life Insurance Traumatic Injury Protection (TSGLI)
Eligibility – SGLI policyholders can apply for TSGLI if they meet ALL of the following criteria. To qualify, you must: 1) have a scheduled loss that is a direct result of the traumatic injury; 2) suffer the traumatic injury before midnight on the day that you left the military; 3) suffer a scheduled loss within two years of the traumatic injury;4) have survived for a period of not less than seven full days from the date of the traumatic injury, and 5) were an active-duty military member, a Reservist, a National Guard member, on funeral-honors duty, or on one-day muster duty.
Coverage – TSFLI is short-term financial support that helps service members recover from traumatic injuries. This program offers policyholders $25,000 to $100,000 in financial support, depending on the circumstances. With SGLI coverage, TSGLI only costs $1 per month and is automatically deducted from your base pay.
Family Servicemembers’ Group Life Insurance (FSGLI)
Eligibility – Spouses and dependent children of service members are eligible, as long as the service member is active duty and covered by full-time SGLI or a member of the National Guard or Ready Reserve covered by full-time SGLI.
Coverage – FSGLI offers a maximum coverage of $100,000 for eligible spouses, which cannot exceed the service member’s SGLI coverage. For each dependent child, FSGLI offers coverage of $10,000. Coverage for dependent children is free of charge.
Servicemembers’ Group Life Insurance Disability Extension (SGLI-DE)
Eligibility – Service members who are “totally disabled” at the time of discharge may be eligible for SGLI-DE. To be considered totally disabled, the service member must have a disability that keeps them from gainful employment or have one of the following conditions: permanent loss of use of both hands, permanent loss of use of both feet, permanent loss of use of both eyes, permanent loss of use of one hand and one foot, permanent loss of use of one foot and one eye, permanent loss of use of one hand and one eye, total loss of hearing in both ears or the organic loss of speech.
Coverage – SFLI-DE extends SGLI benefits for service members living with disabilities. Once accepted, the service member will have a 20-month extension to SFLI benefits from their separation date. After the time limit is up, the service member will have the option to join the VGLI program.
Service-Disabled Veterans Life Insurance (S-DVI)
Eligibility – S-DVI is available to veterans who meet ALL of the following criteria: 1) were released from active duty on or after April 25, 1951, and didn’t receive a dishonorable discharge; 2) were rated for a service-connected disability; 3) in good health except for any service-connected conditions, and 4) applied within two years from the date of the new service-connected disability.
Coverage – S-DVI provides veterans with benefits up to $10,000 for standard coverage and up to $30,000 for supplemental coverage.
Veterans’ Group Life Insurance (VGLI)
Eligibility – Active service members and/or veterans can apply for VGLI if they are within one year and 120 days of retiring or within one year and 120 days of being added to the Temporary Disability Retirement List (TDRL). VGLI requirements can be complex. Check out the full list of what could be required at the official VA website.
Coverage – VGLI is very similar to SGLI, but designed for retirees. Death benefits are available up to $400,000, and spouses and dependents may also be covered. If an SGLI policy is converted to a VGLI policy at retirement, policy owners may purchase death benefits up to the maximum amount held in the active duty policy. For example, an active duty soldier may purchase a $300,000 benefit while serving; upon retirement, however, a VGLI policy may only go as high as $300,000. It is considered good practice to buy the maximum amount of SGLI coverage available to avoid this limitation at retirement age.
Veterans’ Mortgage Life Insurance (VMLI)
Eligibility – To be eligible for VMLI, veterans must meet ALL of the following criteria: 1) have a severe disability caused or worsened by your service; 2) received a Specially Adapted Housing (SAH) grant to buy, build or make changes to a home; 3) have the title of the home; 4) have a mortgage on the home and 5) are under 70 years old.
Coverage – VMLI offers up to $200,000 of coverage in mortgage life insurance. This sum is paid directly to the bank or other lender that holds the mortgage on the home.
American Armed Forces Mutual Aid Association (AAFMAA)
Eligibility – AAFMAA life insurance is only open to members. AAFMAA membership is open to Army or Air Force personnel who are either active duty, within 120 days after separation, guard or reserve, USMA or USAFA cadet, ROTC cadet, retiree (through age 65) or honorably discharged and residing in Virginia, North Carolina, South Carolina or Maryland. There are further requirements specific to AAFMAA life insurance products.
Coverage – AAFMAA offers the largest number of options for both term life and whole life policies. Term policies may pay out up to $800,000, and whole life up to $1,000,000. Coverage is never excluded for deaths related to war, aviation, terrorism, or deployment status. Premiums for AAFMAA are based on the branch of service, age, gender, and health status for any policy that exceeds $100,000.
Navy Mutual Aid Association (NMAA)
Eligibility – NMAA life insurance is open to anyone who is active duty, reserve/guard or retired service member in any branch of the U.S. Military or uniformed services. The NMAA website even has a questionnaire to tell if you are eligible.
Coverage – NMAA also offers both term and whole life insurance options, but with different restrictions. Term life is available in renewable, 10-year increments for up to $1,000,000. No medical exam is required and the premium, once established, does not change during each 10-year period. NMAA’s whole life option is similar to that of AAFMAA, with one exception: policies are based on age and gender only, and medical status does not apply. Premiums are distributed between a tax-free death benefit and a tax-free cash account that accrues interest.
Do you need additional coverage or private life insurance?
There are many variables to evaluate when choosing a life insurance policy. The age at which you choose to purchase, for example, may influence your decision, since the premiums of several of these policies will increase with age.
When deciding whether you need private life insurance or even additional coverage besides SGLI, it’s good to look ahead when you’ll retire from military service. VGLI is often more expensive than private life insurance policies, so some service members decide to pursue private life insurance while still eligible for SGLI.
In some circumstances, veterans may have trouble qualifying for VGLI, which is another reason to go with a private life insurance policy, even if you still qualify for SGLI.
How to transition your coverage after retiring from active duty
Upon retiring from military service, your SGLI will end after 120 days, unless you receive a disability extension. After separation from service, you’ll have one year and 120 days to enroll in VGLI.
Some retired service members choose private health insurance instead of VGLI. Deciding on the best policy depends on the individual. Some may choose one policy over the other due to the benefits offered or the cost of the premium.
Choosing a life insurance policy to protect one’s loved ones can be tricky given the sometimes confusing array of options. Opting into one of the insurance programs designed for military circumstances is often the best choice.
While there are some exceptions, it is generally best to purchase life insurance early in one’s military career in order to reduce premiums and maximize investment potential.