Having the Hard Conversation: Life Insurance for Military Families

Everyone in the world has unpleasant tasks they’d like to avoid. Maybe you’ve been meaning to clean the junk out of your garage for months. Or you have boxes overflowing with old photos that should be organized into albums. Sometimes these jobs can seem overwhelming and we don’t know where to start. However, while leaving your old photos in shoe boxes won’t have any long term effect on your family’s well-being, some tasks need to be taken care of in order to protect your family’s future. Specifically, families need to think about and plan for what would happen if either the service member or the spouse dies unexpectedly.

Many military families may only think about updating wills and checking other legal matters when the service member is preparing to deploy. While getting your affairs in order prior to deployment is extremely important, the fact is that accidents happen every day, both in the U.S. and overseas. While no one wants to have that conversation with a spouse, it’s critical for families to be prepared in case the worst does happen.

SGLI Coverage
Servicemembers Group Life Insurance (SGLI) is a program that provides term life insurance coverage to eligible service members. Eligible service members are automatically enrolled in the program upon entering the military and are covered for the maximum amount – currently $400,000. Although the cost is underwritten by the government, service members must still pay a premium, which is withdrawn automatically from their pay. The rate is 6.5 cents for every $1,000 of coverage; this rate will increase to 7 cents on July 1, 2014. This equates to a monthly cost of $26 for $400,000 of life insurance coverage.

Although enrollment in SGLI is automatic, it is important to know that service members can opt for lower levels of coverage or decline coverage altogether. If a service member is married and declines coverage or chooses less than the maximum coverage, his spouse is supposed to be notified in writing. However, that notification may not happen. Thus, it’s important for spouses to ask their service member about SGLI coverage and for both spouses to be aware of and comfortable with the decision.

How much coverage is enough?
Couples also need to consider whether they should purchase additional life insurance for the service member. While the $400,000 coverage available through SGLI sounds like (and is) a great deal of money, it may not be enough to cover your family’s expenses for years to come. Think about your family’s circumstances. Do you have young children? A mortgage? Car loans, student loans, credit card debt? Does the spouse have a job that will enable her to support the family? The answers to these questions will determine your family’s life insurance needs. To figure out how much insurance coverage your family needs, visit the Veterans’ Administration (VA) Life Insurance Needs Calculator.

Does a military spouse need life insurance coverage too?
Another issue many families fail to consider is life insurance for the military spouse. Spouses of service members are automatically enrolled in Family Servicemembers Group Life Insurance (FSGLI), which provides up to $100,000 in life insurance coverage – unless, once again, the service member elects to decline or reduce coverage. Families may feel life insurance for a spouse who is not the primary breadwinner is an unnecessary expense. That view is shortsighted. Think about all of the responsibilities you handle as a military spouse, from child care to housecleaning to managing finances. A service member who loses his spouse faces taking on all these tasks, or paying someone else to do so. Also, keep in mind that funeral expenses can cost a family $8,000 or more. The VA Life Insurance Needs Calculator can help military families determine how much life insurance they should have for a spouse.

No one wants to contemplate what would happen if they or their spouse were to die unexpectedly. It’s a difficult conversation for spouses to have. However, it’s important to take steps to plan for your family’s future in case the worst does happen. Knowing you’ve done everything possible to protect your family is the best thing you can do for your own peace of mind.


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