Life insurance is one of those unpleasant yet necessary things to consider before you or a loved one is deployed. The military is a career choice that could put your life in danger, and fully understanding your life insurance options is an important step in being prepared for anything.
Service members on active duty are automatically enrolled in in what is known as Servicemembers’ Group Life Insurance or SGLI.
SGLI is a government-operated group life insurance for those on active duty, ready reservist, members of the National Guard, members of the Commissioned Corps of the National Oceanic and Atmospheric Administration, the Public Health Service, cadets and midshipmen of the four service academies and members of the Reserve Officer Training Corps.
Coverage ranges from $50,000 to $400,000 in increments of $50,000. Those on active duty are automatically signed up for $400,000 coverage unless otherwise stated or an opt-out is chosen.
Rarely will service members completely opt out of life insurance offered by the Veterans Association because rates are low and a host of military specific circumstances not covered under typical civilian plans are included.
Although any life insurance is better than none, signing a paper without reading into specifics can cause unnecessary problems should the policy ever come to term.
How Much Coverage Do I Need?
One of the biggest questions to answer is how much life insurance you need. Typically, life insurance is bought to help dependents survive after a loss of income. It is better to be over-insured as opposed to under, but if you have no dependents, for example, you may want to lower coverage to save on premiums.
When deciding how much coverage you personally want, it is important to take the following into consideration.
- Death expenses
- Housing costs (mortgage, rental etc)
- Education (including children)
- Outstanding payments on cars or credit
- Building a safe emergency fund
- Loss of income
- Your assets
What Will My Premium Be?
As stands, premiums stand at 6.5 cents per month per $1,000 of coverage. This adds up to twenty-six dollars a month for the full 400,000 coverage.
An extra $1 premium is included from the Traumatic Injury Protection program. This program insures the service member for up to $100,000 to help with medical expenses relating to an injury sustained as the result of a traumatic event. Known as TSGLI, this service is required unless basic SGLI is declined.
Choose a Beneficiary
After you have decided how much coverage is right for you, it is also very important to decide to whom, and how the payment will be disbursed. As the insured person, you can legally decide who receives the benefit (known as the beneficiary) and how they will receive it, either as a lump sum or dictated payments.
It is important to keep your beneficiary selection up to date. After a divorce or remarriage an update is essential to avoid potential suits later over where funds should be directed.
If your circumstances warrant the designation of a minor as your beneficiary make sure that you set up an account with an adult custodian for the funds. This will hold the money until the child is of age without extra charges.
Photo courtesy FeatheredTar