As with many programs offered by the U.S. Government, life insurance for military spouses tends to be a bit confusing. There are basically 3 programs that are offered: coverage for active military personnel, retired personnel and supplemental coverage for spouses and children of active members.
What’s probably most troubling about life insurance coverage for military spouses is that the maximum amount of coverage is only $100,000. To some people, that might sound like a lot of money, but in reality, it’s barely enough to meet the financial needs of most American families.
You might be wondering, how do the military life insurance programs work?
Life insurance Coverage for Military Members and Spouses
Life insurance coverage is available through the U.S. Department of Veterans Affairs and sponsored by Prudential Life Insurance Company. ServiceMember’s Group Life Insurance (SGLI). SGLI is a program that provides low-cost term life insurance coverage to active Servicemembers. Active military, National Guard and Coast Guard personnel are automatically covered under the program up to $400,000.
The cost for this coverage is very inexpensive and can be purchased in increments of $50,000. Premiums are paid monthly from the member’s paycheck and the maximum amount of coverage will cost the member about $28.00 per month.
Active members covered under SGLI, can also purchase supplemental coverage for their spouses and children (up to age 18) through the Family ServiceMember’s Group Life Insurance (FSGLI) program.
Spouses are automatically covered under FSGLI unless the service member has declined spousal coverage. Spousal coverage can be purchased in $10,000 increments with the maximum coverage of $100,000. The rates are very affordable starting at about $5 per month for spouses under age 35.
“It is great that the Government offers life insurance protection for your spouse
but it should be secondary coverage, not primary.”
One of the biggest advantages of the FSGLI program is there is no medical exam required. Your spouse and minor children can be covered regardless of any previous health conditions – unless you originally declined coverage for them. Then you must show that your spouse or children are in good health before they can re-enroll in the program.
For retired military members or veterans, they can convert their SGLI policy to the Veteran’s Group Life Insurance (VGLI) program within 1 year and 120 days of leaving service and retain coverage. But here’s the kicker…
Once the service member leaves or retires from the military, the spouse is no longer covered. This could be a major problem for many military families. If your spouse still needs coverage, he or she will need to buy private coverage. If any health issues have developed over the years, your spouse might not qualify for private coverage or be required to pay extremely high premiums.
The Case for Private Insurance For Your Military Spouse
To borrow the words from talk show host Shawn Hannity, “You’re a great American.” You are putting yourself in harm’s way to protect us and our Country. Having a life insurance policy to protect the financial well-being of your family is probably one of the most important purchases you can make.
But for some reason many people ignore the fact that their spouse or partner needs coverage too. Getting life insurance for your spouse is just as important. It is great that the Government offers life insurance protection for your spouse but it should be secondary coverage, not primary.
A private policy will help provide the necessary coverage to help replace the income of a working spouse but also provides cash flow to cover household expenses to build a secure future. Some people think, life insurance is only important for working spouses but a policy is just as important for a homemaker too. An insurance policy helps cover expenses for childcare, rent or mortgage payments, real estate taxes, groceries, utilities, transportation and so on.
How would you answer these questions if your spouse suddenly died?
- Could you pay the mortgage, real estate taxes on your income alone?
- Who will help take care of your children? Can you afford childcare?
- Could you pay your household expenses on just your income?
- Will you be able to remain on active service if your spouse dies and is not there to take care of your children?
- Will you easily be able to find a job in the private sector?
- Do you have enough money to cover medical or hospital bills if your spouse has a prolonged illness?
- Could you pay for final expenses? Funeral costs?
- Will your children be able to go to college on just your income alone?
If you answered no to any of these questions, your spouse needs a private life insurance policy over and above the supplementary policy the military offers.
What Type Of Private Coverage is Available?
Term insurance: Term life can be purchased through an agent, a broker or even directly from the insurance company. It’s the most affordable coverage and is considered by most financial experts as the best choice for coverage.
Term insurance is temporary coverage which you purchase for a specific term. Available types of term are 5, 10, 15, 20, 25 and 30 years. The coverage amount (death benefit) remains level and the premiums are guaranteed not to increase during the term. Once the term is over, coverage ends. If insurance coverage is still needed, you would have to apply for a new policy.
Permanent Insurance: Permanent life insurance comes is many different varieties. There is whole life insurance, Universal Life (UL), Guaranteed Universal Life (GUL) and Equity Index Universal Life (IEUL).
The primary concept behind all these different types of permanent policies is to provide lifetime coverage. As long as your premiums are paid, your coverage will not end no matter how long you live. It is perfect for people who see their insurance needs as long term.
Permanent insurance is more expensive than term insurance because at some time in the future, a death benefit will be paid. Whereas with term policies, less than 10% ever pay a death claim because most people outlive the term.
There is also an investment component or cash value account that is associated with all types of permanent insurance. The account can grow at competitive rates and be used for any purpose by the policyholder.
Whether you are in the military or the private sector, life insurance for your spouse is essential for your financial security. Whatever type of coverage you choose is not nearly as important as having enough coverage for you and your family. If you have any questions or need help making sense of your life insurance options, contact us or call 914-633-1717