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Servicemembers Group Life Insurance (SGLI) is a program providing you with term life insurance coverage to eligible service members. Eligible service members are automatically signed up for this system upon entering the military and therefore are covered for any maximum amount – currently $400,000. Even though the cost is underwritten by the federal government, service members must still pay reasonably limited, which can be withdrawn automatically from their pay. The rate is 6.5 cents for almost any $1,000 of coverage; this rate will increase to 7 cents on July 1, 2014. This equates to a monthly price of $26 for $400,000 of life insurance coverage.
Although enrollment in SGLI is automatic, you should realize that service members can go for lower amounts of coverage or decline coverage altogether. If a service member is married and declines coverage or chooses significantly less than the maximum coverage, his spouse is supposed to be notified on paper. However, that notification may not happen. Thus, it’s important for spouses to inquire of their service member about SGLI coverage as well as both spouses to be aware of and comfortable with your choice.
How much coverage is enough?
Couples must also consider if they should purchase additional life insurance coverage for any service member. As the $400,000 coverage available through SGLI sounds like (and is) a great deal of money, it may not be sufficient to cover your household’s expenses for many years to come. Consider your family’s circumstances. Do you have young children? Home financing? Car and truck loans, figuratively speaking, personal credit card debt? Does the spouse have a job that will enable her to support your family? The answers to these questions should determine your family’s life insurance coverage needs.
No one wants to contemplate what would happen should they or their spouse were to die unexpectedly. It’s a difficult conversation for spouses to possess. However, it’s important to do something to policy for your family’s future in case the worst does happen. Knowing you’ve done everything possible to guard your loved ones is the better action you can take for your own peace of mind.
The main reason we buy life insurance policies is to fill a cash need. Should you buy term life insurance on your own military spouse? Well, let’s wargame what the results are if she dies:
Do you really need her income in which to stay your home?
Will you be needing to get child care? What’s going to that cost?
How much income is she leading to your home from work?
What in-home services does she provide that you’ll need to hire you to definitely do if you can’t?
So what does your family care plan seem like? Is there a relative who is able to use the children on short notice when you’re away, on deployments or even for training?
Are you going to need certainly to leave the military in case the spouse is no further there to take care of your kids, permitting you to concentrate on the mission? In that case, just how much time will you need to take into consideration a civilian job?
Was your partner adding to a college fund?
Could you reasonably expect some final expenses for health care bills (over and above what’s covered under TRICARE? (All you completely new same-sex couples within the military, give consideration, here!)
If the reply to the above questions is yes, and the dollar amount involved is much more than you can easily afford, then chances are you should definitely consider buying some life insurance on the spouse.
Fortunately, in case your spouse is within very good health, term insurance is quite cheap for young adults of military age (and their typical spouses!). Considering the stakes involved – including possibly being forced to leave the service under a hardship discharge to care for children – it is a pretty wise solution.
Besides the FMGLI program, you can buy supplementary coverage from literally hundreds of different term life insurance companies – dependent on your state.
The most affordable life insurance coverage there clearly was – for a while, is term life insurance. If your spouse is willing to take a health check (they usually send a nurse to your home or workplace, totally free), and she’s in good health, you may get more coverage significantly more cheaply than if she attempted to skip the health check. (Why? A phenomenon called adverse selection. Folks who are sick have way more inclination to buy policies that don’t require a medical exam – driving up premiums for everybody when you look at the pool. You don’t want to be in the same risk pool with individuals attempting to prevent the medical exam, if you can make it! You’re able to tell these plans by the words “guaranteed issue,” and “you may not be turned down!”
Several things to look for in a personal insurance company:
A real estate agent who listens to your needs
Solid ratings (A or better) from Moody’s, Standard & Poor’s, Fitch and/or A.M. Best.
Guaranteed renewability
Straight to convert to a permanent policy (entire life or universal life)
“Waiver of premium” rider, guaranteeing that the insurance company will probably pay the premiums in your stead in the eventuality of a disability.
Competitive premiums, given the duration of the word or face amount.
Short terms available – someone to five years, guaranteed renewable. It is possible to lock in coverage for longer terms, and some companies will actually sell coverage off to 20 to 30 years, level term. This drives premiums up. If you really crunch the numbers, you may well be best off with a permanent policy, plus the accumulated cash value, than with a 20 or 30 year term policy, with regards to the circumstances.
Most of us have heard the stories: a military spouse loses her husband and this woman is left reeling from her worst nightmare. She not merely has got to fight through her grief, she is also left wondering how she’s going to support her children emotionally and financially as she navigates this new world. Did her husband have life insurance policies? Did he have sufficient?
Life insurance coverage is not something the vast most of us like to think about, especially as it opens the doors for all those terrible ‘what ifs.’ We check off that box for SGLI and put it away from our minds, hoping never to need it—at least not this young.
But what if just checking off a box is just not enough? And is SGLI alone really enough insurance? September is life insurance coverage Awareness Month, so Military Spouse wished to address this important topic in most our lives
Navy spouse, Jill Qualters shares, “once we had children, John and I examined our lifestyle and financial goals and realized that if something happened to him or I, SGLI (400k for him, 100k for me personally) would not be enough for the family. For him, life insurance is peace of mind that if something were to occur to him that he would still be adding to our comfort, future educations, and major life milestones.”
“Often people only consider the bare necessities when considering exactly how much life insurance coverage they require,” points out Colonel Robin A. Snyder, USAF (Ret.), President and CEO of USBA, a non-profit association offering term life insurance to active duty and military personnel. “Consider what the surviving spouse will have to do so that you can thrive rather thanjust survive such as for example schooling to get a job or change careers, acquiring a property off-base, replacing a paycheck in addition to future expenses for your children.”
The fact is, there are a number of factors that could influence your life insurance needs, and it’s important to familiarize yourself with them to achieve that invaluable peace of mind. Marriage, divorce, children, variations in pay grade or salary, leaving the service are typical life changes that determine the types of life insurance policies and best coverage for you personally.
Do you realize, as an example, that when active duty members leave the service, these are typically only included in SGLI for 120 days? As the post-military job search may require more time, it’s essential there’s no gap in that important coverage. Thankfully, service members may choose to supplement SGLI now with something portable they can take with them both after they leave the service or change civilian careers. And, the younger the policy-holder, the more cost effective the insurance coverage.
A military family makes great sacrifices that allow their loved ones to serve, and also for the family who helps make the ultimate sacrifice, the increased loss of a beloved spouse or other member of the family is painful enough without added financial worries. Think of the hardship and expenses your household would face alone – without you and the security you provide.