SGLI - Military Life Insurance Benefits and Post Retirement Coverage

What is SGLI and everything you need to know about it

••• Inti St Clair/Getty Images

The United States government provides members of the military with low-cost group life insurance benefits. Like so many other things in the military, members refer to the Service Member Group Life Insurance simply by its acronym SGLI.

Not only does SGLI offer service members a reduced rate for term life insurance, the insurance program provides members of the military with coverage that they may not be able to obtain elsewhere.

Low Cost

SGLI is very similar to term life insurance coverage that civilians purchase from nationally recognized life insurance companies through insurance agents or with their employers. SGLI is no different, and the US government offers it to members of the military and a few select other federal government employees. These government employees comprise the “group” and make SGLI a group life insurance program.

Members of the military can purchase SGLI in $50,000 increments, but most people purchase the maximum value of $400,000 in coverage because of its extremely low cost. In 2013, the premium cost for SGLI coverage is currently 6.5 cents per $1,000 of coverage provided by the insurance.

So, for example, full coverage of $400,000 in term life insurance benefits will cost a military member a flat rate of just $26 per month. This is the same whether that person is a private who just joined the military or a general who commands a Division in the Army of tens of thousands of Soldiers.

Very Few Exclusions In Coverage

Do you like to skydive? Do you want to learn how to fly airplanes? These high-risk hobbies can increase your life insurance premiums if you were to buy a policy through a traditional life insurance company. This is not the case when you buy life insurance with SGLI. There are no questions to answer. And, in fact, the government requires many members of the military to jump out of airplanes or even fly planes and helicopters as part of their jobs.

Members of the military also typically have to search for a civilian life insurance policy that does not include a war clause. Most life insurance policies do not pay a claim if you are killed in a war zone. But that is exactly where we often order members of the military to do - go and fight for our freedom. SGLI has no exclusions like the war clause. In fact, the government only denies a claim in rare instances such as a military member who dies after deserting his or her unit.

No Exam Term Life Insurance

A physical exam is often a prerequisite when purchasing new life insurance. This is often true whether you are buying a term life insurance or a whole life insurance policy with cash value. Insurance companies often base a portion of your life insurance premiums on your health and the likelihood of you becoming sick or dying based on statistics and potentially precursory health ailments and family trends.

SGLI is not like that. Your family’s medical history or your medical history is not considered when determining the price of your insurance premium or whether or not you will be covered. SGLI covers everyone in the military if they pay the flat rate for premiums regardless of health conditions or family health history. This continues to make the low-cost group term life insurance a good deal financially for the amount of coverage offered to members of the military.

Term Life Insurance and Coverage after You Leave the Military

SGLI is a term life insurance plan. Unlike typical term life insurance plans, members of the military do not sign up for the life insurance coverage in five, 10, or 20-year blocks of time. Instead, SGLI provides life insurance coverage to the member of the military for the entire time that they are in the military and continue to make premium payments through payroll deduction. So, the term of the life insurance coverage can be anywhere from as little as a few months of service to someone who has a 20, 30, or even 40-year military career.

Members of the military are also covered by SGLI for 120 days after leaving the service whether voluntarily, due to retirement, or involuntarily. There are also options to extend coverage for SGLI for up to two years in the case of disability. There is also part-time SGLI coverage that is available to members of the Reserve. If you are near retirement one question to consider is whether you will still need life insurance in retirement.

If you have lost a family member who had military ties or know someone who has, here is a list of resources (including links to claim forms) that can help you navigate the SGLI benefits.

Service Member Group Life Insurance (SGLI) is a great deal for members of the military. Its low-cost term life insurance offers a great deal of coverage for the service members at a low cost with limited to no exclusions. With SGLI, young Soldiers, Sailors, Airmen, and Marines and their families have fewer things to worry about in their personal finance planning and can focus on their jobs and the mission at hand.

Guest author Hank Coleman is a Major in the United States Army currently serving on active duty. Hank is a decorated combat veteran of over 11 years with two yearlong tours of duty in Iraq. Additionally, Hank writes about personal finance on his blog Money Q&A. You can follow Hank on Twitter @HankColeman or check out his podcast “Your Money: Your Choices” on iTunes.