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INSIGHT: Military life insurance

‎07-14-2014 01:08 PM

Tim Kiesow


No one likes increased costs, especially when it involves insurance. But in the case of Servicemembers Group Life Insurance (SGLI), it’s best to avoid a knee-jerk reaction to reduce your coverage.


A small increase in premiums for SGLI goes into effect this month. For those with the maximum $400,000 SGLI policy, total monthly premiums will rise from $27 to $29. Those with lesser coverage will experience smaller increases. The premium increase will be used to replenish the Department of Veterans Affairs funds used for paying claims, which has been depleted in recent years, the VA says.

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Those in uniform for more than six years may notice that premiums are returning to their old level. In July 2008, the VA reduced SGLI premiums because its reserve funds had grown too large, and now those same reserve funds are running too low for comfort. We believe that SGLI is an essential benefit for our nation’s service members. It’s critical the program has the long-term financial strength to serve its policyholders.


Life insurance is vital to your family’s financial wellbeing. Cutting back to save a few bucks isn’t worth it. Even those on a tight budget can find an extra $2 per month. Skip a visit to the coffee stand or fight the impulse buy at the grocery store. It’s a small sacrifice for the peace of mind that your loved ones are properly protected.


We also suggest that you accept the automatic election for SGLI, which enrolls you for the maximum $400,000 coverage. If your current policy is below the maximum, you should consider raising your coverage to that top level. This ensures adequate protection is in place. And while you’re at it, take a few minutes to review your policy to confirm or update beneficiaries.


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Source: Veterans Affairs Servicemembers Group Life Insurance (SGLI) Program Page at

*Total premium Includes $1 for mandatory Servicemembers Group Life Insurance Traumatic Injury Protection (TSGLI)


Up to $100,000 in additional life insurance is available for military spouses and $10,000 is available per child through the Family Servicemembers Group Life Insurance program (FSGLI). Premiums for FSGLI are not affected by the rate change for SGLI.


With SGLI rates increasing, private life insurance providers might contact you, trying to convince you to reduce SGLI and sell you on their business. Be wary of sales pitches that claim to save you money. Yes, the monthly premium for private insurance may be a bit lower than SGLI, but that might mean less coverage, a shorter coverage term or other limitations.


In terms of coverage and affordability, SGLI is a good deal for military members. Replacing it entirely with a private product is not a good idea. However, if you require coverage above $400,000, a private insurer can supplement SGLI and provide additional benefits to help ensure your family’s financial security or for those military who suffer traumatic injuries. Since at some point you will leave the military, a private policy can help to protect your loved ones when you lose SGLI.


Remember: Life insurance is intended to help protect your family by replacing lost earnings. Don’t underestimate how much you need. Not sure how much coverage is right for you? Try the USAA Life Insurance Needscalculator.


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Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNER™ in the United States, which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.


Views and opinions expressed by members are for informational purposes only and should not be deemed as an endorsement by USAA.


The information contained is provided for informational purposes only and is not intended to represent any endorsement, expressed or implied, by USAA or any affiliates.


Life insurance and annuities by USAA Life Insurance Company, San Antonio, TX and in New York by USAA Life Insurance Company of New York, Highland Falls, NY. All insurance products are subject to state availability, issue limitations and contractual terms and conditions.  Each company has sole financial responsibility for its own products.


Financial planning services and financial advice provided by USAA Financial Planning Services Insurance Agency, Inc. (known as USAA Financial Insurance Agency in California, License # 0E36312), a registered investment adviser and insurance agency and its wholly owned subsidiary, USAA Financial Advisors, Inc., a registered broker dealer.


No Department of Defense or government agency endorsement.



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