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Servicemembers’ Group Life Insurance (SGLI) Review
In the following Servicemembers Group Life Insurance review we have done our best to help demystify SGLI and provide you with the information you need to make the best decision on what direction to take for your life insurance needs, both now and into the future. If you are transitioning from SGLI to Veterans Group Life Insurance you can compare life insurance quotes to make sure you are getting the best rate and policy available.
What is Servicemembers Group Life Insurance (SGLI)?
In case you were unaware, Servicemembers Group Life Insurance (SGLI) is a specially-devised low-cost term life insurance policy for service members. If you happen to be eligible for the coverage, you receive the maximum amount available and this is something we’re going to discuss a little later. In fact, everyone who qualifies is actually enrolled automatically which means there’s no application process involved.
For all service members, the maximum coverage is issued from the beginning but there are certain adjustments that can be made. For example, some will choose to designate certain beneficiaries, choose less than the maximum coverage, or even decline Servicemembers Group Life Insurance altogether. As well as taking you through every detail you should know regarding SGLI, today we’re also going to provide some of the most common myths and questions that we see from service members and their families.
Who is Eligible for SGLI?
Ultimately, there are several people who automatically qualify for SGLI coverage including;
- Midshipmen or cadets belonging to US military academies.
- Anyone on active duty within the Marines, Army, Coast Guard, or Navy.
- Midshipmen, members, or cadets in the Reserve Officers Training Corps (ROTC); assuming you’re authorized in providing practice cruises or any other training.
- National Oceanic and Atmospheric Administration (NOAA) commissioned members.
- Members of US Public Health Service (USPHS).
- Volunteer servicemembers for a mobilization category in the Individual Ready Reserve (IRR).
- National Guard and Ready Reserve members; minimum of 12 periods of inactive training each year.
As long as you fall into one of these categories, you automatically qualify for Servicemembers Group Life Insurance so what sort of coverage is involved?
With SGLI coverage, there’s a maximum of $400,000 but it’s also available in increments of $50,000. For all covered members, they receive 120 days of complementary coverage after the date of separation too which could prove essential later in your career.
If you’re a Reserve member but don’t qualify for coverage according to the parameters above, you may still be available for part-time coverage but the 120 days of complementary coverage will not be included in this.
If you happen to experience a serious injury and are disabled at the time of your separation, you can also extend coverage by an extra two years. If your injuries are so severe that you can’t work after experiencing an injury during service, the SGLI Disability Extension allows these two years of coverage for no fee. Once this extension period comes to an end, you then become eligible for VGLI and this is something we’re going to discuss towards the end of our guide here today.
National Guard and Ready Reserve - If you’re currently in a non-paid role within the Ready Reserve or National Guard, you should still be eligible for coverage as long you’re drilling for points (as opposed to pay) and you have a minimum of twelve periods of inactive training over the course of the year.
If you qualify, the rates under SGLI will be exactly the same as those drilling for pay. This being said, there will be some differences in how the premiums are handed from one branch of service to the next. For this reason, you should talk to your specific branch when looking for information and they should point you in the right direction. From here, you’ll know all about your coverage and how to pay your premiums.
As we’ve hinted, SGLI coverage requires a monthly premium and this will be taken from your base pay. Currently, each $1,000 of insurance will lead to a seven cents premium; Traumatic Injury Protection (TSGLI) coverage will add $1 to your premiums each month. With this in mind, there are eight levels of coverage in total and they lead to the following deductions from your base pay:
As you can see, the charges to your base pay will include the SGLI premium as well as the $1 extra for TSGLI. Depending on the level of coverage you choose, your premiums could range from a small $4.50 all the way up to $29 per month. Compared to some other options within the industry, this is still affordable and one of the reasons why Servicemembers Group Life Insurance is so popular among servicemembers.
Making Changes to Your Policy
As mentioned previously, there’s no need to take any action if you qualify for the coverage because the policy will be set up on your behalf and you’ll be put onto the largest coverage. However, you should still act if you want to reduce the coverage you receive, designate certain beneficiaries, or if you want to decline your coverage and remove it from your file.
Navy/Air Force - In years gone by, people within the Air Force and Navy had to go through a confusing process with the SGLV 8286 to change SGLI elections but this has now been removed. Nowadays, the SGLI Online Enrolment System (SOES) allows Air Force and Navy members to manage their life insurance coverage with ease.
Without having to complete long and frustrating paperwork, this online platform means you can log in and make changes within seconds. Whether it’s a change to your coverage or the information of your beneficiary, these changes can be made without even having to take a trip to the personnel office. To get started, just visit the website and sign in to access your information and coverage.
Other Uniformed Services - For those who belong to any other uniformed service, you will have to submit the SGLV 8286 form; the Servicemembers’ Group Life Insurance Election and Certificate. This being said, the SOES online platform is steadily expanding which should mean it’s only a matter of time before it’s available for all uniformed personnel. To get this process started, you should get in contact with your Personnel Office. If your changes can wait, you can actually see when your service is expecting to start using SOES online.
Common Misconceptions Regarding SGLI
Admittedly, Servicemembers Group Life Insurance can be a little confusing if you haven't spent any real time around the process in the past. Therefore, before we head into the process of switching your SGLI to VGLI, we have some common misconceptions, myths, and rumors that currently exist. By the end, you should feel confident on the topic and perhaps you can even correct some people you know so they have the right information moving forward.
Privately Purchased Body Armor/Helmet - In the past, we’ve heard people suggesting that SGLI will not pay out any claims if the insured dies while wearing privately purchased helmets and body armor; this is FALSE. Regardless of what body armor or helmet someone is wearing, SGLI claims will be paid and this is because these two conditions aren't labeled within the claiming criteria; it’s not something that’ll be investigated.
TSGLI v SGLI - Next up, does paying TSGLI reduce the SGLI payable amount your beneficiary receives when you pass away? No, this is actually FALSE once again and a rumor that has no grounding.
When it comes to everything related to TSGLI, this has no implication on the payable SGLI amount whatsoever. If you were to be insured for $400,000 and you received a $50,000 TSGLI fee because you experienced a traumatic injury, this isn't taken from your coverage and the $400,000 will still be sitting exactly where it was beforehand. When you pass away, your beneficiary will still receive the full amount regardless of TSGLI payments.
No Helmet During Motorcycle Accident - Will your beneficiary still receive the coverage amount if you die during a motorcycle accident with no helmet? Yes, this rumor is FALSE. Regardless of whether you were wearing a helmet while riding a motorcycle, the SGLI (or VGLI) will pay the beneficiary the amount owed because the helmet (or lack of) is not considered during the claims process.
No Seat Belt Transport Accident - So the SGLI and VGLI will still pay with no helmet, but what if you weren't wearing a seat belt in a car or even an airplane? Again, this rumor that the beneficiary receives nothing is FALSE. As you might expect, the seat belt doesn’t play a role in deciding the case and the SGLI and VGLI proceeds will reach the beneficiary whether you were wearing a seat belt or not.
Reservist Coverage At Drill - If you’re a member of the National Guard or perhaps you’re a Reservist, you may have heard the coverage is only ‘active’ when you’re actually at drill…this is FALSE. If you're a member of either of these two entities, your coverage will be active throughout the year as long as you’ll be scheduled for a minimum of 12 periods of inactive duty over the course of the twelve months. On this theme, we should also note that you’ll also be covered for the 120 days after separation or release.
SGLI Dividend Based on Military Service - In recent times, there seems to have been a rumor that a ‘bill’ had passed allowing anyone to apply for the SGLI insurance dividend if they had a certain amount of service built up. Once again, and perhaps unsurprisingly, this is absolutely FALSE. In truth, these rumors can be dated back around three decades but it still isn't true. Despite OSGLI and VA doing all they can to remove this rumor from circulation, it still exists and is likely to continue this way for many years to come.
Black-Zoned Areas - If you die within a ‘no-go’ or ‘black-zoned’ area, will the coverage still apply and will the beneficiary still receive the money? Yes, because this statement and belief is FALSE. Regardless of where the insured passes away, the appropriate amount will make its way to the beneficiary.
Terrorist Attack - With two misconceptions left, you can probably guess which way they are going to go and this is why they’re called ‘myths’ and not ‘facts’. For the penultimate myth, some claim that the SGLI or VGLI will not pay any claims for people who are killed in terrorist attacks. To stick with the theme we seem to have created, this is FALSE. For all those who have been killed in terrorist attacks over the years, the beneficiary has received the owed amount as expected.
War - Finally, will SGLI claims be denied if you die within a war zone? No, this rumor is FALSE and we don’t know how this one started. With SGLI and VGLI coverage, there are no exclusions that currently exist which means the coverage amount will always go to the beneficiary.
If you have been told any of these rumors in the past, we urge you to show this guide to whoever told you so they can be confident the statement isn't true. If you aren’t aware of the source but know that people still believe in one or more of these facts, print this guide off and place it somewhere important or just make sure they have the right information for the future.
VGLI - Veterans' Group Life Insurance
For those still in the service, Servicemembers' Group Life Insurance is a great option but what happens after leaving the service? With no income, especially after retirement, life insurance becomes even more important but you cannot continue with SGLI. Luckily, there’s a solution and it comes in the shape of Veterans’ Group Life Insurance (VGLI). For all servicemen and women, your SGLI can be converted from SGLI to VGLI and this is where we’re going to end this guide because it’s an important point to remember.
In the past, there’s been a lot made of the process involved in converting one to the other but it can be incredibly simple as long as you’re willing to follow the process. For starters, you’ll have to apply for VGLI within one year and 120 days after being discharged or leaving the service. If you complete the application within 120 days of becoming ‘non-active’, you can set up VGLI without providing evidence of good health so there is an advantage to acting quickly and efficiently.
For many, they don’t realize that you can avoid medical examinations in this way so this is an important point to remember. If you wait until the 120 days have come to an end, you’ll have to show your good health with a medical examination and this can provide issues for some.
SGLI to VGLI Online
Nowadays, the process of converting your SGLI to VGLI is easier than ever before because it can be done with an online form. During this application, you’ll be guided through the process step-by-step and you’ll even be shown a chart of premiums so you know what to expect. Once you’ve provided accurate information, the application will be assessed and you should have a result within seconds. If you don’t gain acceptance immediately, you may have to go through a review process.
If you don’t have easy access to the internet or you would rather do it manually, you can use form SGLV 8714 and the US Postal Service. Although you’ll have all the details printed on the form, we should note that this method requires you to send the premium for the first month. If you need more information regarding this conversion process, feel free to visit the VA website (you can also find the required forms here if you plan on applying via post).
Advantages - Considering you don’t have to prove your health if you apply for VGLI within 120 days of leaving service, this is one huge benefit when compared to civilian life insurance. Additionally, your premiums will be based on your age as opposed to using gender, health, and your smoking status. If you have health issues that would lead to expensive policies elsewhere, we recommend converting to VGLI.
Disadvantages - On the flip side, your coverage will be limited to what you had installed on your Service Group Life Insurance policy. If you’re going to need a bigger coverage amount after retirement, we recommend increasing your SGLI coverage before you leave your branch. If you’re young and in good health, however, you might find that civilian life insurance is more appropriate and this is something you should assess.
If you keep your best interests in mind, you can make the best decision for your future regarding SGLI and VGLI. Once again, you’ll find plenty of support and advice on the VA website so be sure to look.