Details about Military Life Insurance Payout and SGLI

Not many people are aware of military life insurance payout or even know that military members can enjoy access to life insurance. The insurance is provided for active military members considering their services and the fact that they are willing to put themselves in line of danger. The families are given the option for protection that will prevent them from dealing with financial hardship.

Life insurance has never been an exciting or pleasant topic, but it is extremely crucial if you especially have a family or people who depend on you. In most cases, families don’t really have enough. That’s why it would be a good idea to keep your SGLI, if you have one, so you can really enjoy the most benefits out of it.



About Is Military Life Insurance

Before you know more about military life insurance payout, you should know what it is. You see, when you join the military, you are enrolled automatically in SGLI or Servicemembers Group Life Insurance plan. It’s a low cost insurance policy providing $400,000 worth of life insurance. Not only you can enjoy it, but you can also get access to the limited traumatic injury protection. The premium is set at around $25 a month, and it would be deducted directly from the base pay. However, you can actively refuse the protection or you choose an amount less than $25.

The life insurance plan is basically government-sponsored. The benefits and features aren’t always found in the regular civilian plans. The application itself is called as the ‘negative option’. You won’t have to apply or sign up for anything because you would be registered automatically for the coverage up to $400,000 when you join the military. You have the option to go with lower coverage and it utilizes in $50,000 increments. It means that you can choose around $350,000 coverage, or $300,000 coverage, or $250,000 coverage, and it goes on. You are also able to decline coverage completely although it’s not advisable.

What about the military life insurance payout? The coverage of $400,000 is the payout. This kind of coverage is a type of term life insurance. The regular civilian plans have certain period of time, which can range between 1 and 30 years. Some providers may offer up to 40 years. In SGLI, your term coverage is your active service that extends to 120 days after you leave (the service). In civilians plans, the prices may vary depending on the occupation, health, lifestyle options (like smoking or exercising), gender, age, or other contributing factors. In their plans, servicemembers may be charged higher rates because they are considered risky. Because of their works, the servicemembers have to face greater risks that aren’t faced by regular civilians. If the servicemembers take a regular and civilian insurance policy, they may be rejected death coverage that is caused by service-related causes.

In SGLI, all the active duty members would be considered eligible for the benefits, charged the same amount no matter the tobacco use, health status, age, and gender. The death benefits would be paid to their beneficiaries, regardless the cause. It can be service related or not, such as an off duty car accident. Like most other death benefits of life insurance, the military life insurance payout would be tax free. The monthly premium (of $25) includes around $1 surcharge for TSGLI or Traumatic Injury Protection. The TSGLI is able to provide a short term financial support (between $25,000 and $100,000) that can be used for recovery. Those are the differences of SGLI and regular civilian insurance coverage, designed to help the members because of their contribution to the government.


The Requirements and Eligibility Criteria

  • Before you are considered eligible for military life insurance payout or be the members of SGLI, you need to meet the requirements below. You don’t have to meet them all. You only need to meet at least one of them to get the full time coverage.
    You should be the active duty member of Coast Guard, Marine Corps, Air Force, Navy, or Army
  • You must be a commissioned member of NOAA (National Oceanic and Atmospheric Administration) or the USPHS (United States Public Health Service)
  • You must be a midshipman or cadet of the Unites States military academies
  • You must be a cadet, member, or midshipman of ROTC (Reserve Officer Training Corps) that is engaged in practice cruises or authorized training
  • You should be a member of National Guard or Ready Reserve, assigned to one unit, and also scheduled to perform 12 periods of at least inactive training each year
  • You should be a volunteer in IRR (Individual Ready Reserve) mobilization category

In the event you are in the nonpay status with National Guard or Ready Reserve, you could be considered eligible for the (full time) SGLI coverage if you can meet both of the listed requirements:

  • You are focusing more on the points instead of payment
  • You are scheduled for (12 periods of) inactive training of the year

However, if you are the nonpay member and you are considered eligible for the military insurance, you are required to pay the premiums directly, and it’s a must. It’s also crucial to appoint a beneficiary.


The Other Details

Signup is generally automatic because the service already has all the info to register you (for the program). However, you still need to appoint a beneficiary, or a person to get your death benefit. You can provide such information online through SGLI Online Enrollment System or SOES. SOES will help you manage your coverage (and its entire coverage), including editing or changing the beneficiary (and the info), choosing different coverage amount, or declining coverage.

Your kids and spouse would be separately covered through FSGLI. The information of your spouse would be listed or kept in Defense Enrollment Eligibility Reporting System) or DEERS. They would be enrolled automatically in FSGLI or Family Servicemember Group Life Insurance. Spouse would be eligible for $100,000 protection, but it can’t go over the coverage amount for the service member.

The FSGLI offers low cost coverage, especially for the younger members. The premiums would be deducted from the member pay. Again, SOES can give you access to change and manage the coverage. However, different from the SGLI, the rates for FSGLI would increase as age, and it usually happens in 5-year increments. Dependent kids would also be automatically enrolled, with coverage up to $10,000, but there is no premium.


How to Access SGLI (and FSGLI) through SOES

Not only SOES gives you access to your insurance policy, but you can also enjoy military life insurance payout. You can access it by:

  • Going to milConnect
  • Signing in
  • Going to Benefits and then Life Insurance SOES
  • Checking the entire details, including coverage, beneficiary info
  • Making any updates if needed


SGLI Features and Limitations

If you think about it, SGLI is an ideal life insurance product. When you are in the service, you won’t have think about having any insurance coverage or such thing alike. The protection is low cost and the military life insurance payout is tax free. You won’t have to worry whether you are qualified for the coverage or not. Through TSGLI, you can also the extra protection from traumatic injury. You can also get the extra protection for family coverage through FSGLI. However, just like other insurance coverage, there are certain conditions that you need to be concerned with.

First of all, the maximum coverage is limited. Although the military life insurance payout is tax-free, the amount is considered low. With other insurance providers, you can enjoy premiums of more than $500,000, but with SGLI, the $400,000 is the maximum benefit. If you want to make sure that you have enough for your family, it should be enough to cover

  • Funeral cost
  • Future college costs
  • Mortgage balance (as well as other debts)
  • At least 7 times and the maximum 10 times of the annual salary


The second downside is that you won’t be able to keep the SGLI after you leave the service. Many civilian employees are given ‘portable’ group life plan, which means that when they leave the company, they can still keep the policy, provided that you keep on paying the premiums.  It’s unfortunate that SGLI coverage isn’t like that. You can only keep your SGLI for as long as 120 days after leaving or retiring from the service.

But as a veteran, you are allowed to apply for VGLI or Veteran Group Life Insurance within 8 months (or 240 days) after the separation. If you apply within the first 3 months (120 days), acceptance would be guaranteed. But if you go past over the 120 days, you may be required to take medical examination or provide good health proof. With the VGLI, you can only enjoy equal coverage, or even less than the SGLI. Rates would be higher than SGLI and it would increase once in every 5 years with age.

If you don’t really like the option of VGLI, you can continue your coverage by converting the policy to the permanent while life policy. Certain insurance providers may let you do this if you do this within 120 days after the separation. But you need to remember that their monthly premiums are higher, but you can enjoy life long coverage as well as other financial perks.


SGLI Supplement

There are several organizations that focus on helping the servicemembers to supplement their military benefits. One of them is MBA or Military Benefit Association. MBA is a (non profit) organization to safeguard current and also former federal employees, (service) members, and their families economic welfare.

MBA allows the servicemembers to purchase life insurance protection up to $1,000,000 to supplement the military benefits. You are allowed to keep the MBA plan even after leaving the military. This plan doesn’t have any enrollment time limit. You can apply while you are still in the military or after you leave. The premiums are generally higher than the SGLI, but it can also be cost effective when compared to the VGLI. For instance, VGLI may charge $20 a month for non tobacco user under 30, while the MBA ‘only’ charges you $12.50 a month for a coverage worth of $250,000.


Final Words

If you are a member of SGLI, you may want to know about SGLI Disability Extension. This one allows disabled servicemembers (during discharge time) to keep their SGLI to 2 years of period, maximum, without them having to pay the premiums.

In short, you may want to learn more about the SGLI before you can decide to accept or decline the insurance. Just like others, there are many possible benefits offered by the SGLI although there are also some possible downsides. You also need to learn about the military life insurance payout if you want to enjoy real benefits of the coverage without complication or drama.

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