Servicemembers Group Life Insurance (SGLI) is part of a service member’s employee benefit package. But it has limitations and like any group life insurance plan and SGLI should not be the sole financial protection for your family.  

Compared to most employer group term insurance plans, SGLI has a very generous maximum death benefit of $400,000. When added to the recently increased Service Death Gratuity of $100,000, active-duty servicemembers have $0.5 million of life insurance coverage. The standard group insurance for civilian employees is less than half that coverage. However, as significant as $500,000 sounds, it is probably not enough protection for a surviving spouse with children  today. Remember, the true purpose of life insurance is to provide a stream of income for your survivors.   

Additionally, the $100,000 maximum coverage for your spouse is inadequate to meet the needs of most families. Child care will become a priority for the surviving servicemember and $100,000 will simply not provide the quality and quantity of care needed.This amount will simply not provide the quality and quantity of care needed. Many young couples have dual incomes and the loss of a spouse’s income can have a devastating impact on the family’s quality of life. 

What's more, SGLI is considered temporary coverage. Like all employer group insurance, it terminates when you leave your employer. SGLI is again very generous in providing you with coverage for free for 120 days after you leave active-duty, but then it is gone. You do have an opportunity to convert over to Veterans Group Life Insurance (VGLI) when you separate or retire from active duty. However, if you are healthy, you will find VGLI premiums to be expensive.

There is no government option for replacing the Service Death Gratuity. Therefore, you face losing $0.5 million in financial protection for your family when you leave the service. In order to replace it with an individual life insurance plan, you will need to show proof of insurability. That means a medical questionnaire and a physical exam. Make sure you are insurable. The process takes time so start early. 

SGLI is not enough protection for a young growing family. Plus, for most non-tobacco using servicemembers, it costs more per month than you should pay.My advice is to purchase individual coverage while you are young and healthy and can obtain the best rates. You will then own an insurance plan that will provide you with the increased coverage that you need and a plan that you will be able to take with you when you leave the service. And remember, do not expect a civilian employer to even come close in replacing your active duty survivor benefits – it is your job to you to protect your family.