Paycheck Chronicles

Understanding SGLI

Life insurance:  people don't like to think about it, they don't like to pay for it, and they sure as heck don't like to figure out how much they need.  Unfortunately, all three of those things are important to building a safe financial future.  Fortunately, military families have the opportunity to purchase inexpensive coverage through the Servicemember's Group Life Insurance plan, commonly called SGLI.  SGLI is term life insurance that is available to active duty, reservists, NOAA and PHS members, service academy cadets and midshipmen, and ROTC members.  There is also an SGLI option that covers spouses and children.

SGLI is available in $50,000 increments, up to a total of $400,000 for the service member.  The rates are not based on age or tobacco use, which is a great benefit.  The current premiums for SGLI are $6.50 per month for each $100,000 of coverage, plus $1.00 for the Traumatic or a total of $27.00 per month for full coverage.  In addition, SGLI does not carry exclusions for certain types of deaths, or charge extra premiums for certain jobs.

Spouses and dependent children can be covered by the Family Servicemembers Group Life Insurance plan, usually referred to as FSGLI.  FSGLI is available in $10,000 increments, up to a total of $100,000.  The amount of spouse coverage can not exceed the amount of SGLI that the service member has chosen.  Spouse coverage is age based and is calculated based on the spouse's date of birth as listed in DEERS.

Dependent child coverage is in the amount of $10,000.  Dependent child coverage is provided without cost to the servicemember.

Servicemembers married to servicemembers can maintain the full $400,000 of SGLI coverage as well as the full $100,000 of FSGLI coverage on both spouses.

One important feature of the SGLI program is that it automatically covers you and your family at the maximum rate.  If you desire to have less coverage, you must fill out the SGLV 8286 form and give it to your personnel office.  I do not recommend reduced coverage to anyone with a spouse, or children, or family members who rely on your income.  It is easy to think that you can save a few dollars by reducing your coverage, but it is really not worth it.

SGLI also has an option to convert to a Veteran's Group Life Insurance (VGLI) after you leave the service, but most people find that private commercial coverage is less expensive.

Have more questions?  See the VA's Life Insurance page, or ask in the comments and I'll find the answer.

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