How Much Life Insurance Coverage Do You Need?
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How Much Life Insurance Coverage Do You Need?

July 16th, 2018 | 2 min. read

What is Service members' Group Life Insurance and does it provide the protection you need? We’ve gathered the intel you need to make smart decisions about this valuable benefit.

If you're like many service members, you probably never owned a life insurance policy until you were issued Service members' Group Life Insurance (SGLI) when you entered the military. SGLI provides low-cost term life insurance coverage, and if you are eligible, you will be automatically enrolled without having to apply for coverage. Here are three things you need to know about this important benefit.

Servicemembers' Group Life Insurance is Cheap, Don’t Skimp

When you're automatically enrolled in SGLI, you are also automatically enrolled at full coverage, which is currently $400,000. However, you can make changes to your SGLI coverage at any time. In fact, some service members who are single and have no dependents may feel tempted to decline SGLI or at least reduce the amount of coverage to lower their monthly premium. But in most cases, this would amount to being penny wise and pound foolish.

You may not know that paying just under $30 per month for $400,000 of coverage is an incredible bargain! For example, reducing your SGLI from $400,000 to $250,000 would save you only about $10.50 per month, or 35 cents per day. The low cost of SGLI makes keeping and paying for the full $400,000 a smart financial decision for most service members, even if it's more coverage than you need at this stage of your life. Even if you're single, chances are you have parents or siblings who you could name as beneficiaries until you have a family of your own.

SGLI May Be Less (or More) Than You Currently Need

It’s risky, however, to assume there's something magic about that $400,000 amount. Yes, it may be more coverage than you need...for now. But it may also be less than you need. The only way to know for sure is to assess the needs of your survivors if anything were to happen to you. Key questions you need to ask to ensure you have the right amount of life insurance include: 

  • Would it be necessary to replace your income? 
  • If you own a home, would you want your spouse to be able to pay off the mortgage?
  • If you have children, would you want money to be set aside for their education? 

You Won't Get SGLI Forever

After separating from service, military personnel have the option to convert SGLI to Veterans' Group Life Insurance (VGLI); however, premiums are higher and will continue to go up since they are based on the age of the insured. It is important to note that you do not have to medically qualify for VGLI as long as you apply for it within 240 days of separation. So if you have potentially disqualifying health problems, it may be your only life insurance option when you separate from service and lose your SGLI. That's why it's wise to plan ahead and consider securing permanent life insurance that can supplement your SGLI now and replace it when you leave the military. 

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