FSGLI Conversion – What Happens to Spousal Coverage?
My least favorite feature of the military spouse benefits is the FSGLI conversion option. When I say conversion option I am referring to how spouses can take their military life insurance benefit into civilian life when their service member separates the service. Now this is actually a saving grace for some spouses but for most it puts them in a sticky situation regarding their life insurance portfolio.
Let me explain why.
Now, forgive me for being blunt but I’ve noticed that most military spouses are oblivious to their true life insurance needs. They seem to have this mentality that they are all set up with whatever coverage is provided under their service member’s plan. Most ask me, “why do I need life insurance, if the military gives me some?”
It’s hard keeping up with military life! Can I get an amen? I understand how this may be confusing at first. While we do get a lot of perks for enduring this crazy lifestyle, the military does not actually take care of everything. I repeat…the military does not actually takes care of everything.
So where am I going with this? It’s IMPERATIVE that you ensure your family has the proper life insurance plan in place! It’s not something anyone can afford to mess up.
As a life insurance professional with 14yrs of experience, this is troubling. If military spouses are relying solely on this benefit they are not only drastically under insured but can have insurability challenges when their service member exits the military.
Unlike the service member’s plan, there is only one option to continue the coverage into civilian life. That option is to convert their FSGLI group life insurance into a whole life policy with a participating company. Whole life is a permanent plan that costs much more than term life. It’s actually one of the most expensive of plans.
Are you listening? Why be stuck with the most expensive plan when you have better alternatives. This conversion option is a saving grace for those military spouses who cannot get insured anywhere else due to a health issue. Regretfully, these spouses likely didnt plan ahead and purchase supplemental coverage BEFORE their health issues came on. Don’t be that spouse!
The best thing a military spouse can do is to buy additional life insurance(by that I mean outside of the military benefit) while they are young and healthy. That way, when the time comes to sign off on your expensive conversion option, they can simply decline and move onto embracing the civilian world. We know that is going to be an adjustment!
SGLI Spouse Supplemental Coverage
The FSGLI offers a low cost policy for spouses when the family is in the military. It is a plan I recommend all spouses take advantage part in. However, spouses should make it a priority to purchase additional life insurance. Especially considering they do not have the same challenges their service member’s do when purchasing coverage. Unless they happen to be living overseas when they get around to doing it!
This gives military spouses a wide net of options to choose from when looking at supplemental coverage. There are a few associations that offer low priced plans that are similar to the FSGLI premiums. However, most standard life insurance companies can offer spouses competitive rates. It is a good idea to check around.
FSGLI Conversion Saving Grace
The great thing about this feature is that if a military spouse has an uninsurable health condition they can continue their coverage without proof of eligibility. Basically there are no questions asked or requirements to provide medical records as long as the spouse applies within 120 days from the service member’s separation date.
This conversion option can also be exercised under the following circumstances:
- Date of divorce from the service member.
- Date service member terminates the SGLI.
- Date service member terminates the FSGLI.
- Date of the service member’s death.
Exercising this conversion can be a necessity for spouses who cant get life insurance coverage elsewhere or don’t have the time to look into it. Although, it’s a good idea to shop the market for alternative options. Preferably well beforehand when they are young and healthy.
Military spouses and children need to be aware of these unfavorable conversion options in order to structure a proper life insurance portfolio. It’s essential that they have their own outside life insurance plan in place they have control over.
Most importantly, the SGLI family insurance benefit has very low coverage limits and military families should be supplementing it with additional plans to protect their family from financial hardship.
As a practicing agent and military spouse I understand the unique challenges families face. I can provide competitive life insurance options to help them protect their families. Request an online quote or call me today!