A look at life insurance for the military

Military man hugging his son
  • The VA offers low-cost Servicemembers' Group Life Insurance, or SGLI.
  • Age, sex, health and tobacco use don't affect SGLI premiums.
  • Upon release, service members can switch to permanent or term coverage.

When Veterans Day arrives, many Americans may wonder: How do we insure the lives of our military?

Service members and their families enjoy a carefully woven safety net of life insurance, death gratuity, lifelong survivor benefits, financial counseling and bereavement support, all tailored to meet the unique challenges of modern military life should the unthinkable happen.

The life insurance portion of today's safety net is underwritten and administered by Prudential in an exclusive partnership with the Department of Veterans Affairs, or VA. According to its most recent figures, the VA was the nation's seventh largest insurer in 2009 with 7.1 million individuals insured for $1.33 trillion.

Here's a rundown of the major insurance and benefit programs for military members, veterans and their survivors.

Servicemembers' Group Life Insurance

The centerpiece of VA life coverage is Servicemembers' Group Life Insurance, or SGLI. Each service member entering a period of active duty or reserve status is automatically covered for the maximum $400,000 death benefit. Premiums, which currently run $27 per month for the maximum coverage, are automatically deducted from their paycheck.

All service members covered by SGLI also receive Traumatic Injury Protection coverage for an additional $1 per month that pays benefits from $25,000 to $100,000, depending on the severity of the covered injury.

"Policy provisions, including maximum benefit amounts, rate categories and the manner in which the premiums are set, are all established by federal law," says Sheila Bridgeforth, a Prudential spokeswoman. "Their premiums are based on peacetime mortality. If extra hazards of military service result in additional program costs, each branch of the service may supplement the premium."

In addition to active service members, SGLI is available to Ready Reservists, members of the Coast Guard, commissioned members of the National Oceanic and Atmospheric Administration and the Public Health Service, cadets and midshipmen of the four military academies, and members of the Reserve Officer Training Corps.

Upon death, the $400,000 SGLI benefit is put into an interest-bearing Prudential Alliance Account in the beneficiary's name. Beneficiaries may choose a lump-sum payment or 36 equal monthly installments, a feature designed to allow survivors time to grieve and plan their future.

Most survivors take the lump-sum payment for two reasons, says Ami Neiberger-Miller, public affairs officer for the Tragedy Assistance Program for Survivors, or TAPS, an independent, publicly funded nonprofit that works with surviving families.

"Their pay is stopped, and they have a year to move if they've been living on post," she says. "The military will fund the move itself through their other benefits, but I know of several widows who have used that (SGLI) money to purchase a home."

Unlike most civilian life policies, SGLI premiums do not vary by age, sex, health or tobacco use.

In the event a covered service member becomes totally disabled while on active duty, they may extend their SGLI coverage for up to two years.

Family SGLI

Service members also may purchase Family SGLI that covers spouse and children up to a maximum coverage amount of $100,000. The rates are uniform and affordable -- $5 per month through age 34 for the maximum coverage and up to $50 per month for those 60 and over.

Death gratuity

When a member of the military dies while on active duty or within 120 days of separation, the last unit they served with pays their next of kin a $100,000 death gratuity.

"In these wars, a number of deaths are among people who are very young -- 19 or early 20s. About 45 percent of casualties don't leave a spouse," says Neiberger-Miller. "If the next of kin are the parents, they will receive SGLI and the death gratuity, but there is no ongoing monthly (survivor) benefit per se."


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