Optional insurance

P

Parent of 4

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Jan 17, 2018
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In the packet DS received one of the forms is for optional life insurance. Am I wrong in believing that all members of the Army are covered by a life insurance policy provided for them? If so, I cannot see a reason a student with no dependents would need to pay for this.

Does anyone have any knowledge on this subject?
 
Thank You for the reply. I am still unclear however, is this supplemental or does the Army NOT provide life insurance?
 
There are some other survivor benefit programs, but essentially the Army does not provide life insurance for free. SGLI is cheap, and deducted from monthly pay. Soldiers are automatically enrolled at the $400,000 rate, but can choose a lesser amount or opt out (I believe). I have never known a Soldier who has opted out entirely. I do know those types of decisions require chain of command counseling - or they used to anyway.
 
Soldiergriz said:
There are some other survivor benefit programs, but essentially the Army does not provide life insurance for free. SGLI is cheap, and deducted from monthly pay. Soldiers are automatically enrolled at the $400,000 rate, but can choose a lesser amount or opt out (I believe). I have never known a Soldier who has opted out entirely. I do know those types of decisions require chain of command counseling - or they used to anyway.
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Absolutely correct. Instructions to choose a lower amount (which costs the cadet less) or to opt out of SGLI are in the packet titled “instructions for applicants offered admission.”
 
Please also note that the SGLI is extremely cheap- around $16 a month if I recall circa 1985-2012.
 
SGLI also has no combat zone or hazardous duty exclusions, unlike most “civilian” policies.

It’s a very cheap term policy. With the onset of post-9/11 wartime engagements, the max payoff rose rapidly from $250,000 to where it is now.
 
In reading the "Instructions for Candidates" it looks like $400,000 is the default enrollment and will cost the cadet at 29/month payroll deduction. They can select less coverage at a lower cost or sign some paperwork to opt out. I am going to advise DS to find out if he can increase the amount at a later time and select a lower amount now, as no one is currently depending on his income. Like you, I don't see that he has the need for a large policy at the moment.
 
Yes, can be changed pretty much whenever. You actually have to verify your data in the Army every year to make sure you don't want to change anything.
 
My DS selected the lowest amount, no need to spend the extra money. He can raise it at any time. After he graduates and has a family and a need he can bump it up.
 
A couple years ago when he was entering usma I instructed my son not to take the optional Insurance. It makes absolutely no sense to take it. He has no dependents whatsoever, and the insurance would just provide a benefit to my wife and I if he died. It is something he would have to pay for, but we would benefit from if he purchased. We do not need to be taken care of by our son, and while we would be horrified if something like that happened, receiving life insurance proceeds would not help in our grief. It is not a situation where his death would create some extra financial burden on us.

I think most people don't understand where life insurance is wise, and when it is not. In this case the optional life insurance for a Cadet is, in virtually every situation I can think of, completely unnecessary and financially unwise.
 
My only thought was -what if something should happen to him while in the Army and he ends up uninsurable? I was doing research on the insurance and found this paragraph on the SGLI website: "If you are totally disabled at the time of separation (unable to work), you can apply for the SGLI Disability Extension, which provides free coverage for up to two years from the date of separation. At the end of the extension period, you automatically become eligible for VGLI, subject to premium payments." It is this scenario that makes me nervous. But, like brovol stated, we are his beneficiaries and that just feels weird to me. So our go-around is probably going to involve him getting about 200,00 and we will just automatically deposit the $15 premium into his USAA account every month to reimburse him. Then he has it (somewhat satisfies my paranoid "what if he is disabled/uninsurable in the future" worries) yet he doesn't have to pay for something himself that he has no need of at the moment and is of no benefit to him. I dunno - thoughts on this?
 
VGLI is for veterans for precisely the reason you noted - they became uninsurable for life insurance for some reason while serving. It’s a standard DVA benefit that gets briefed when someone departs the service. The insured still has to pay premiums. I was eligible for it when I retired from AD, but chose not to use it, as I did not need it for those reasons.

There are also companies who serve the military community with other term and whole life insurance products in individual policies that the service member retains after leaving active duty as personal policies. Those companies do not have combat exclusions or other stipulations for AD, such as no coverage for military pilot. The civilian parallel is while you work for Acme, Inc., you get the employee group term life as a benefit, but you usually, as you accrete spouse, house and kids, get individual policies as well. When you leave Acme, you probably no longer have that group term life, but you have your individual policies.

Two companies, long-established dot-orgs, which we always mention to our sponsor alumni family, are Navy Mutual Aid Assn and Armed Forces Benefit Assn.
 
Here is another twist. After explaining to DS that he didn't need the insurance now or even when he goes on active duty until he has dependents of his own he said the following. "This isn't for you it's for me. If something happens to me defending my country I am fine with it, if that actually happens I would like to know I helped to take care of my family as well".. I honestly had no answer for that.

All I can say is these are very special young men and women we are talking about on these forums.
 
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