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SGLI Reshapes Reservists Life Coverage

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The United States has called more than 220,000 members of the National Guard and Reserves to active duty this year.

That figure means that more than 200,000 Americans have expanded term life benefits from the Servicemembers Group Life Insurance program.

Even many financial advisors who work near military bases say they know little about the SGLI program, although participating in the program can lead to long-lasting changes in a clients life coverage.

“There probably is a need for [advisors] to be educated about these benefits,” says Charles Strang, director of the SGLI program.

Coming home from a long stint of reserve duty may not be as important a life event as getting married or having a baby, but it is a good reason to conduct a thorough review of life insurance needs and benefits, Strang says.

Congress established the SGLI program in 1965 to replace an older military life insurance program. The office that Strang runs, a Livingston, N.J.-based unit of Prudential Financial Inc., Newark, N.J., collects about $500 million in premium revenue per year to insure the plan and administer it.

The SGLI program provides limited coverage for reservists who spend little time training with their units or serving on active duty.

Reservists who train regularly or go on active duty receive more comprehensive SGLI benefits.

“It doesnt really take a lot of energy” to get full coverage, says Willie Alexander, a spokesman for the U.S. Department of Veterans Affairs. “The active-duty folks are automatically enrolled unless they choose not to be.”

The maximum death benefit is now $250,000, and service members also can buy term life coverage for their spouses and children.

Starting July 1, service members who buy SGLI coverage to insure their own lives will pay only 6.5 cents per month per $1,000 of coverage, or $16.25 per month for $250,000 in coverage, down from the current level of 8 cents per $1,000 of coverage, or $20 per month, the VA says.

When service members who have SGLI leave the service, they can convert to five-year term policies from the Veterans Group Life Insurance program, or they can convert to whole life policies from one of the dozens of commercial insurers that offer SGLI conversion policies.

Former service members can also get VGLI coverage on a guaranteed-issue basis if they pay the required premium within 120 days of separation from the service, the VA says.

For service members who will see active duty, one big advantage of having SGLI coverage is that the SGLI policies pay benefits even if insureds die in combat.

Some mutual insurers that cater to service members and some publicly traded life insurers also sell policies without war exclusions.

For instance, Jefferson Pilot Financial, Greensboro, N.C., a unit of Jefferson-Pilot Corp., notes on its Web site that “Jefferson Pilot Financials group life insurance contracts do not contain exclusions for losses due to war or acts of war, or for losses sustained during military service.”

But the armed services recommend that their members accept the SGLI coverage because “so many civilian policies do have war exclusions,” Alexander says.

More information about the SGLI and VGLI programs is available at

Reproduced from National Underwriter Edition, May 12, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.