Increase in SGLI Coverage

On October 17, 2022, President Biden signed the “Supporting Families of the Fallen Act”.  This act increased the Servicemembers Group Life Insurance maximum coverage from the current limit of $400,000 to the new limit of $500,000.

This increase, this first since 2005, has a modest premium increase to $31 and does not impact Family SGLI coverage limits, which are $10,000 for a minor child and $100,000 for a spouse.

You can read a primer about SGLI Coverage here: Primer about SGLI.

Key Takeaways:

1) SGLI, at a $16.13 per $1,000 of coverage (500 / 31) is a great deal.  True, for the youngest and healthiest, perhaps a better rate can be had.  However, given that there is no underwriting, SGLI is very simple and its available to all military members. 

2) No Underwriting.  Most people are generally healthy and otherwise insurable.  Others, while few, are not insurable for one reason or another.  Guaranteed availability of Life Insurance, especially when considering young minor children’s well-being, is a materially significant attribute of SGLI.

3) Level Premiums.  It is NOT common for a 50 Year-Old Flag Officer to pay the same premium as an 18 Year-Old recruit for the same amount of Life Insurance. Since I am closer to one extreme than the other, I could pithily say the old salt deserves a break.  Whatever the case, as you age in the military, SGLI becomes a better and better deal.

4) Portability to VGLI.  As part of this change, VGLI, a separate life insurance offering for military retirees, coverage limit will also increase to $500,000.  The decision to secure VGLI coverage is unique to each servicemember.  However, no underwriting for the first 90 days after retirement is a significant benefit to those who are otherwise uninsurable. For more information about Veterans Group Life Insurance, see our blog post. 

Conclusion

For my last job on Active Duty in the Navy, I was the Director of Navy Casualty. Not infrequently, I would personally witness Deceased Sailors’ families lamenting poor SGLI decisions. Essentially, for just a bit more than a Netflix subscription, a Servicemember can provide for his/her family in the unpleasant event of his/her passing.  As far as financial decisions go, it’s a relatively easy call.  The increase in coverage only eases your loved ones’ burdens.