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Life insurance considerations for those serving in the military

By Jim Sloan on January 12th, 2011

With the United States engaged in war on two fronts--in Afghanistan as well as Iraq--many members of the armed forces are finding themselves deployed repeatedly to some of the deadliest corners of the world. Naturally, many servicemembers find themselves wondering if their families back home will be provided for if they are killed or injured in battle.

Fortunately, members of the armed services, including National Guardsmen and ready reservists, qualify for low-cost group life insurance through the U.S. Department of Veterans Affairs.

The Servicemembers' Group Life Insurance (SGLI) program, which is also available to members of the Reserve Officer Training Corps, cadets and midshipmen at the four U.S. service academies, and members of the both the Commissioned Corps of the National Oceanic and Atmospheric Administration and the Public Health Service, provides term life insurances in $50,000 increments up to $400,000.

Advantages of servicemembers group insurance

Because SGLI is group life insurance, premiums are based on how much insurance you want, regardless of your age.

Other things to know about SGLI:

  • You are automatically covered for $400,000 on your first day of active duty or active duty for training, unless you decline or reduce your coverage.
  • Your life insurance benefit allows your beneficiaries to pay expenses or to replace your salary.
  • Benefits are tax-exempt.

If you are disabled when you leave the military, you can retain your life insurance policy for up to two years, free of charge. Servicemembers can also purchase life insurance for their spouses and dependent children, up to $100,000, through the Family Servicemembers' Group Life Insurance program.

When you leave the service, you can either convert your SGLI coverage to a policy with the Veteran's Group Life Insurance (VGLI) or convert to a permanent life insurance policy with a private insurer. For more information on converting your SGLI policy, visit the United States Department of Veteran Affairs website.

Other life insurance policies

As a servicemember, you also have the option to purchase additional life insurance from private insurance companies. But be aware that many insurers, unlike SGLI, don't provide coverage for death due to acts of war. Practices vary, so you should understand how a life insurance company handles issues related to military deployment before purchasing a policy.

As with any private citizen, you can choose between two types of private life insurance--term life insurance or whole life insurance. Term life insurance covers you for a predetermined amount of time, from one to 20 or 30 year increments, and pays only if you die within the designated term period. Whole life insurance, on the other hand, provides an insurance benefit for your heirs no matter when you die, as well as a cash savings feature that builds over time. Because whole life insurance is meant to cover your insurance needs for your lifetime and includes the added savings feature, it's more expensive than term life insurance.

Your premiums for these private policies will be dictated by your age, overall health, existing health conditions, and lifestyle, such as whether you smoke or drink excessively. Life insurance companies also look at your hobbies, driving record and other factors that may provide clues to how long you'll live.

Always ask for the credentials of life insurance agents

It's important to check the credentials of any life insurance agent selling life insurance policies at military installations. These agents must have permission from the Department of Defense, and must be licensed by the insurance department in your state. Ask to see their permits and licenses.

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