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Military Life Insurance
There are many aspects of financial planning for military servicemembers, but none more important than life insurance, which makes it possible for your survivors to carry on without financial hardship. It's important to understand your life insurance options both during and after your military service.
Servicemembers Group Life Insurance (SGLI)
All servicemembers qualify for inexpensive group life insurance through the SGLI program, which provides up to $400,000 of term life insurance protection while you serve on active duty, or are in the National Guard or reserves. In addition, it provides $100,000 of coverage for your spouse and $10,000 for each child. SGLI rates are very affordable, and don't increase with age.
While SGLI offers an outstanding value, don't assume that it's enough. Depending on your family's needs, you may need to supplement it by purchasing your own individual policy.
SGLI coverage stops 120 days after you leave the military. To replace it, you can either:
§                            Convert your SGLI to Veterans Group Life Insurance (VGLI); or
§                            Purchase your own term or permanent life insurance policy.
Converting to Veterans Group Life Insurance (VGLI)
VGLI provides life insurance to servicemembers after separation from duty. While both SGLI and VGLI are administered by the government, they differ in the following ways:
§                            VGLI premiums are much higher, and they increase rapidly as you age.
§                            You cannot insure your spouse or children through VGLI.
If you're in good health, you can probably find your own individual coverage at a much lower rate than what VGLI will charge. VGLI is very valuable, however, to those whose health prevents them from buying their own policy.
Purchasing Your Own Term or Permanent Life Insurance Policy
Individual life insurance policies can offer many advantages:
§                            Affordability. When you apply for an individual policy, you may qualify for much lower rates if you're in good health. VGLI's relatively high rates reflect the fact that anyone can qualify for it.
§                            Family coverage. While VGLI coverage isn't available for spouses or children, an individual policy can cover your entire family.
§                            Level premiums. VGLI rates rise with age, which could make your coverage unaffordable after several years. By contrast, many individual policies guarantee a level premium for a period of years, or even for life.
Military Protection Plus
Military Protection Plus has two key components:
§                            A severe injury benefit. Anyone who suffers certain severe injuries in the line of duty will receive $25,000.
§                            Easy transition. We provide a simple, affordable, guaranteed way to increase your coverage after you separate or retire from the military - without a medical exam or the high costs of VGLI.
Term and Permanent Life Insurance
Term Life Insurance provides coverage for a specified period of time, and offers the highest level of coverage at the lowest initial cost. In addition:
§                            Premiums remain level and are guaranteed up to 30 years.
§                            It can be converted to a permanent policy if your needs change.

Affordable rates and you can choose your term.
Permanent Life Insurance provides lifetime protection. In addition:
§                            The policy builds tax-deferred cash value that can be accessed through loans or withdrawals.
§                            While it initially costs more than term, it can be less expensive over the long haul.
Unlike VGLI, you must qualify medically to purchase an individual policy. You should apply before you leave military service. That way, if your health prevents you from qualifying, you'll still have time to convert to VGLI.


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posted 1/26/2010

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