FSGLI – Why It’s Not Enough[Coverage & Cost Breakdown]

FSGLI - A Complete Review of Military Spouse & Child Life Insurance Coverage

FSGLI is the acronym for the family service member group life insurance benefit also know as SGLI family insurance. This plan is a subset of the life insurance benefit provided to military members. Family SGLI coverage can only be obtained if the service member maintains their military life insurance plan. Coverage for qualified, dependent children is automatic under a full-time SGLI member's coverage. A spouse does not have the have their benefit active in order for these children to be covered. 

As a military spouse, life insurance professional I've come to notice how confused many spouses are about this benefit. Life insurance, in general, can be confusing. That is why I've created this resource for families to have the details of military spouse life insurance in an easy to understand, digestible format. 

In this post we'll be discussing the program eligibility, coverage, cost, conversion, child benefit, procedures as well as how they compare with alternative options on the private market. While the FSGLI is one of the great benefits for military spouses, there are some disadvantages if it's the only plan in place. Read on and discover what you need to know about life insurance as a military dependent. 

How much coverage is provided under the FSGLI

The SGLI family benefits are for dependent spouses and children. Spousal benefits are provided in increments of $10,000 up to a maximum of $100,000. Child coverage is available at no cost up for $10,000. While the FSGLI benefit may be a great one, it's major pitfall is the fact that its maximum amount is so low. Since life insurance is used to cover things like funeral expenses, medical bills, debt payoff and income or childcare replacement, think about how quickly $100,000 would be exhausted. If you don't have additional life insurance than this puts your survivors at risk for financial burdens when you pass away. 

Many military spouses are under the impression that "the military covers everything". We sure get a lot of benefits as military families! Rightfully so as we make great sacrifices that are very taxing on our family life. While I am sure you are appreciative to have this low cost benefit, $100,000 is simply not enough military spouse life insurance to properly protect your family.

Want to talk about it? Schedule a 5 minute consultation today!

Military spouses come in from all types of backgrounds. This contributes to the unique makeup of the military family. There's really no perfect model. While many of us are patriotic and dedicated spouses, we have a diverse set of interests and goals. Whether a spouse works or stays at home, it's safe to say they need to supplement their FSGLI benefit with an outside life insurance plan!

A General Recommendation

Military spouses are significantly under insured at $100,000 in life insurance coverage. Experts recommend a minimum of $250,000 in supplemental coverage but sometimes they recommend as high as $1,000,000. The VA page offers some great examples of things to consider when doing a life insurance needs analysis.fsgli Spouse Coverage

It's a good idea to make a list of your financial obligations, net income, and assets. Then you will want to make a calendar reminder to review these needs every year or two. The key to knowing your loved ones will be financially ok without you is by proper planning. No one likes to think about dying early but the reality is no one knows when it's their time to go.

Leaving your family exposed to financial hardship by ignoring your life insurance needs is just plain irresponsible. Please don't put it off.

Sample Supplemental Military Spouse Life Insurance Rates

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The Milspouse Profiles & Life Insurance Considerations

Military spouses usually fit into one of the below categories. Determining which profile you might fit under best is a good way to assess your family's life insurance need. Let's talk about what spouses in each of these categories need to consider regarding their life insurance portfolio.

Milspouse Stay at Home Parents - Financially Undervalued Assets

It's no secret that it is common for spouses to be stay at home parents. Stay at home parents are often the rock that holds the household together. Both families, civilian and military, forget to outline the financial contribution these types of parents provide for their households. The easiest way to think about this is remove them from the equation and think about how expensive it can be to replace all of their tasks with a professional.

The need to have adequate life insurance protection on them gets overlooked a lot. It's crucial to consider how much replacing tasks like childcare, home schooling, chauffeuring children to activities, cooking and meal preparation, household cleaning and so on will cost if a family's stay at home parent passes away.

Questions your family should discuss: 

  1. How many of these things will our service member be able to handle effectively(keyword) while juggling work responsibilities?
  2. Will our service member have to get out of the military to support our family?
  3. If so, will our service member work or go to school full time?
  4. Do we have extended family to help with support our household?
  5. If so, can and will they do it for free?
  6. Would it be necessary to hire a full or part time nanny to assist with household tasks?
  7. If so, how much will that cost a year?

Pro Tip: Salary.com historically estimates the base salary of a stay at home parent to be $39,000 a year. 

Milspouse Employees - Dedicated Multi-Taskers

Experience has taught me that juggling a job of any sort while being married into the military is really touch! Balancing two work schedules in any household has it's challenges. As a military family, it's hard to find a routine and once your do your bound to be PCSing to a new duty station. You can pretty much stop striving for one. You'll live a more peaceful existence if you accept that early on.

Military spouses who are working are doing it for a reason. It could be to develop a career track record, earn side money for family goals or spending money or maybe it is simply to have something to do. When reviewing life insurance for military spouses who are employed, it's important to consider these reasons.

Questions your family should discuss: 

  1. Does our military spouse's income contribute to basic living expenses or financial commitments we have as a family?
  2. If so, list these out and assign dollar amounts.
  3.  Does our military spouse's income contribute to long term financial goals we have as a family?
  4. If so, list these out and assign dollar amounts.
  5. How much of our military spouse's income would we need or want to replace if they passed away prematurely?

Pro Tip: Separating financial commitments and goals helps when doing a life insurance needs analysis or calculation. 

Milspouse Business Entrepreneurs - Business Continuation

If you haven't heard of a military spouse business owner, then it's safe to say your living under a rock. Military spouses all over the world are crushing their business goals and often earning income that surpasses that of the service members. Internet entrepreneurship continues to rise and it's a perfect business model for a military spouse who moves frequently. What is really inspiring is that many military spouses have found a way to successfully run a brick and mortar business as well.

While these success stories are amazing, no doubt, military families may be overlooking the continuation elements of these businesses. As a start up spouses are often involved in the nitty gritty and their first few years are solely dedicated to getting off the ground and reaching a sustainable profit margin. Once military spouse owned business reach this level they should be looking into policies such as key person and buy sell life insurance. Each of these plans serves a different purpose to protect the businesses continuation should an essential employee or owner pass away. Let's face it, building a business is not an easy task and families may have a very personal legacy tied to it's creation. That is why is crucial to figure out how to protect it.

Questions your family should discuss: 

  1. Are there any employees of the business that if they were to die would significantly effect the profit and/or operations?
  2. If so, how much would it cost to replace them and how long would we need to bring the new employee up to speed?
  3. If the business has additional owners, have we set up a buy sell agreement in the event one of us dies?
  4. If so, how is this buy sell agreement funded?
  5. If the business has a sole owner, would it be important to our family to continue operations if they die?
  6. If so, how would this be accomplished and funded?

Pro Tip: Work with a broker who has experience with these types of plans to protect the business continuation. 

 

Curious about the cost of  life insurance? 

Consumers overestimate the cost by 3X! Life insurance is WAY more affordable than you think it is. Use the quoter on this page to get a preview of rates through A rated life insurance companies. 

Melissa reprents several carriers and can help find the ones that are not only the best deal but military friendly. Check with her today for more information. 

(844)514-5433

 

 

Do families pay for the FSGLI benefit?

The SGLI fam/spouse life insurance is not free. The premiums are deducted from the service member's pay. If a service member's spouse is not registered in DEERS but becomes automatically insured under the FSGLI plan, they will owe back premiums once they become registered. The plan pricing is based on the spouse's age and unlike the service member's plan will increase as they get older. Children are insured at no cost. Although the FSGLI cost is a reasonably priced benefit, it does have some key disadvantages

                                                 FSGLI rates as of July 01, 2014

sgli rates as of july 2014

The Accelerated Benefit Option

Like most life insurance policies, this plan includes a provision that provides access to policy benefits in the event an insured receives a terminal illness diagnosis from a qualified medical professional. Please see the description from the VA procedural manual: 

The Accelerated Benefit Option (ABO) gives the Servicemember access to the death benefits of the FSGLI policy before the death of a terminally-ill spouse. The member may receive up to 50% of the face value of the spouse coverage through the ABO. The ABO is available in $5,000 increments. In order to qualify for the ABO, the spouse must have a medical prognosis of life expectancy of nine months or less. Only the Servicemember can apply for ABO and the benefit will be paid only to the Servicemember.

Can you take your FSGLI with you into civilian life?

While the military spouse life insurance has conversion privileges, in my opinion, they are unfavorable. Spouses do not have the opportunity to opt into any kind of extension plan like service members can with the veteran plan.

Their only option to continue their coverage is by converting it into a commercial policy with a participating company. The major pitfall with this option is that it can only be a whole life insurance policy.

Whole life insurance is one of the most expensive plans on the market. In most cases, it's unnecessary. Term is a much more suitable and affordable plan for military spouses. 

Sample Term vs. Whole Life Insurance Rates

Here are some examples of the price differences between term and whole life policies for military spouses around the age their family commonly enters into the civilian world.

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Common Health Issues That Affect Life Insurance

List health ailments that most commonly affect rates and eligibility

Converting your military spouse life insurance

Spouses who are insured under the Family SGLI program have the option to convert Spousal Coverage to an individual policy of insurance within 120 days from any of the following events:

  • The date of the Servicemember's separation from the military
  • The date of the Servicemember's divorce from current spouse
  • The date of the Servicemember's written election (SGLV Form 8286A) to terminate Spousal SGLI coverage
  • The date of the Servicemembers written election (SGLV Form 8286) to terminate his/her SGLI coverage
  • The date of the Servicemember's death.

If a spouse wishes to convert Spousal SGLI Coverage, the spouse must apply for conversion within 120 days from any of the events listed above and must also:

  • Select a company from the Participating Companies listing
  • Apply to a local sales office of the company selected
  • Give a copy of the most recent Leave and Earnings Statement to the agent, showing the deduction for Spousal SGLI, along with an applicable proof of coverage from the list below:
    • The Servicemember's separation document (Form DD-214 or NGB-22, or written orders)
    • The Certificate of Dissolution of Marriage between the spouse and the Servicemember
    • The Servicemember's FSGLI Spousal declination (SGLV Form 8286A)
    • The Servicemember's SGLI declination (SGLV Form 8286)
    • The Servicemember's proof of death (Report of Casualty Form DD 1300 or civilian death certificate)

Military Dependent Child Life Insurance

Military child life insurance is provided under the Family SGLI benefit for  dependent children of all Active Duty, Ready Reserve and National Guard members who have full-time SGLI coverage. The benefit is $10,000 and does not have a cost.

VA Eligibility Guidelines:

A “dependent child” includes any unmarried child in one of the following categories:
− natural born child
− legally adopted child
− stepchild who is a member of the Servicemember’s household
− unmarried child between the ages of 18 and 23 who is pursuing a course of instruction at an
approved educational institution
− child who became permanently incapable of self-support before age 18

In the unfortunate circumstance a spouse has a stillborn child, this benefit does provide coverage. There is no ruling on how the funds can be used. Many families use it for funeral expenses or medical bills.

Please see the VA's definition for stillborn benefits:

stillborn child whose death occurs before expulsion, extraction, or delivery, and not for the purposes of abortion, and:
• (1) whose fetal weight is 350 grams or more; or
• (2) if the fetal weight is unknown, whose duration in utero was 20 or more completed weeks of
gestation, calculated from the date the last normal menstrual period began to the date of
expulsion, extraction, or delivery.

Should you buy supplemental life insurance on a child?

As an experienced life insurance adviser, I can tell you that parents vary on how the feel about this topic. I've encountered many that are very practical and proactive about obtaining coverage on their children. On the other hand, I've encountered many who refuse to enter into a discussion about it.

Regardless of a parent's feelings, two things are certain:

  1. No one knows when a person will die...including a child.
  2. No one knows whether or not a child will develop an uninsurable health condition.

Forgive me for being frank, but it really is that simple. Insurance is for the "what ifs" and it's important to be not only informed but prepared. Buying life insurance on a child can protect a family from having to use fundraising efforts for a proper funeral if they lose a child. It can also provide long term coverage for a child who does develop a health condition that makes them unable to obtain their own policy in their adult life. Essentially you are looking out for their best interests. You can always discontinue a child plan once your child becomes a young adult and secures their own plan.

What type of policy is good for military child life insurance?

It's my recommendation that each individual has their own policy. You can cover spouses and children in the form of riders; however, they can lose their coverage if the policyholder passes away.

Life insurance prices are based off your age. The younger you are the more affordable the rates. Life insurance for children is not offered under term plans. You have to purchase these plans in the form of whole or universal life. The policy amount should range between $25,000-$100,000 and fit well within your family's budget.

Sample Child Life Insurance Rates

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Procedures

Please see the below highlights from the Family SGLI Coverage(FSGLI) Procedural Guide:

FSGLI Eligibility & Application

See the eligibility and application process from  the VA website: VA website:

Spouses and dependent children of the following are eligible for FSGLI:

  • Active duty Servicemembers covered by full-time SGLI and

  • members of the National Guard or Ready Reserve of a uniformed service covered by full-time SGLI.

The FSGLI benefit is not available to spouses of retired military personnel, even if they are insured under the VGLI program.

Service members who are covered under full-time SGLI, are eligible to insure their spouse, regardless of whether their spouse is on active duty, retired, or is a civilian. Coverage is also available for dual military couples as you can see in the procedure section below.

Applying for the SGLI spouse coverage is a relatively easy process. Usually, it coincides with the time a service member is required to register their spouse in the DEERS system and meet at the unit's personnel office.  I'm sure we all remember that initial appointment to get our ID card and become and official military spouse. As a new spouse it can be intimidating but don't be afraid to ask questions.

This is usually the only time spouses will see any paperwork regarding the benefit they have. If a spouse or service members needs to update their family's FSGLI benefit they can use this Family Coverage Election form.

Applying After the Fact

FSGLI coverage can be obtained after initially declining the benefit; however, does require a health review for approval. This is to ensure members take advantage of the benefit well before they develop a health issue that otherwise prevents them from obtaining coverage. There are a variety of health issues that can affect life insurance eligibility. It's a good idea to sign up for the FSGLI asap just in case!

According to the VA, these are the procedures to apply for this benefit after your initial appointment at a DEERS office:

How To Apply

If you are covered under full time SGLI and your spouse is not automatically covered, you may apply for spouse coverage using one of the following methods, depending on your branch of service:

If you are in the Navy, Air Force or Army…

You no longer need to use the SGLV 8286A to apply for spouse coverage! You can now apply for and manage your spouse coverage under Servicemembers’ Group Life Insurance (SGLI) coverage using the SGLI Online Enrollment System (SOES). SOES allows Servicemembers with full-time SGLI coverage to make fast and easy changes to their life insurance coverage and beneficiary information at any time without completing a paper form or making a trip to their personnel office. To access SOES, sign into the MilConnect portal at www.dmdc.osd.mil/milconnect and go to the Benefits Tab, Life Insurance SOES- SGLI Online Enrollment System.

If you are in any other uniformed service...

until your service tells you to begin using SOES, you must complete and submit the SGLI Form SGLV 8286A, Family Coverage Election, Servicemembers' Group Life Insurance to change your FSGLI spousal coverage elections. You should contact your Personnel Office for any changes to Basic SGLI or Family SGLI coverage. follow this link to find out when your service is scheduled to begin using SOES.

FSGLI Beneficiary

The Servicemember is the beneficiary of the FSGLI coverage, so no naming of a beneficiary is needed. A Servicemember is not entitled as beneficiary if he/she is convicted or pleads guilty to involvement in the death of the spouse or the dependent child. In such cases, the beneficiary or beneficiaries are determined under
38 USC 1970(a).

Beneficiary Financial Counseling Service (BFCS)

BFCS is available to a Servicemember who is paid an FSGLI benefit upon the death of a spouse. BFCS provides no-cost personal financial counseling to beneficiaries of FSGLI policies. The Servicemember will be notified of this benefit when they receive the payment of the proceeds of their FSGLI.

Online Will Preparation Service

The online will preparation service enables beneficiaries to quickly and easily prepare a will without an attorney. After answering a series of straightforward questions, the beneficiary will receive a legal will, valid in all states, ready to print and sign.

The Accelerated Benefit Option

Like most life insurance policies, this plan includes a provision that provides access to policy benefits in the event an insured receives a terminal illness diagnosis from a qualified medical professional. Please see the description from the VA procedural manual:

The Accelerated Benefit Option (ABO) gives the Servicemember access to the death benefits of the FSGLI policy before the death of a terminally-ill spouse. The member may receive up to 50% of the face value of the spouse coverage through the ABO. The ABO is available in $5,000 increments. In order to qualify for the ABO, the spouse must have a medical prognosis of life expectancy of nine months or less. Only the Servicemember can apply for ABO and the benefit will be paid only to the Servicemember.

Conversion Contacts

The spouse can get information about conversion by contacting the Office of Servicemembers’ Group Life Insurance (OSGLI) by telephone or letter, or by visiting the SGLI/VGLI web site.

Telephone number: 1-800-419-1473
Web site: www.insurance.va.gov
Address: 80 Livingston Ave
Roseland, NJ 07068

Ending Spouse Coverage

FSGLI spouse coverage ends due to the following events:

1) Servicemember elects to decline SGLI coverage (SGLV form 8286)
2) Servicemember elects to decline FSGLI spouse coverage (SGLV form 8286A)
3) Servicemember’s marriage ends due to divorce
4) Servicemember dies
5) Servicemember is discharged from active duty service or separated from Ready Reserve or National Guard service

Ending Dependent Child Coverage

FSGLI dependent child coverage ends due to the following events:

1) Servicemember elects to decline SGLI coverage (via SOES or SGLV form 8286)
2) Child no longer qualifies as an insurable dependent
3) Servicemember dies
4) Servicemember is discharged from the service

Note: FSGLI dependent coverage is not affected by the members election to decline FSGLI spouse coverage
(SGLV form 8286A)

Dual Military Couples

Servicemembers who married other Servicemembers on or after January 2, 2013, are not automatically covered under FSGLI spouse coverage, however they may request FSGLI spouse coverage in SOES or by completing SGLV Form 8286A.

All of the health questions pertaining to the spouse must be answered. If any of the questions are answered “Yes,” the election must be referred to the Office of Servicemembers’ Group Life Insurance (OSGLI) for a decision on coverage (this happens automatically in SOES). The premiums are not due until OSGLI determines coverage is approved. If requested coverage is approved, the premiums are due back to the month the election was received by the service.

The same rules of coverage level apply to a request for FSGLI spouse coverage as apply to the automatic coverage discussed earlier – the coverage level can be from $100,000 to $10,000 in increments of $10,000, however the spouse’s coverage cannot be more than the Servicemember’s coverage level (i.e. if a Servicemember has $50,000 of SGLI coverage, then the spouse coverage can be no more than $50,000)

Death Claim Reporting

The Servicemember can make a death claim upon the death of a spouse or a dependent child. The Servicemember should report the death of the spouse or dependent child to his/her personnel support.

For branches of service not using SOES: In order to have the FSGLI premiums stopped, the Servicemember must update DEERS by having the spouse’s date of death recorded via a RAPIDS entry. The personnel support element notifies the applicable Casualty Office so it can aid the Servicemember in proceeding with the FSGLI claim.

Call, fax or write OSGLI
Toll free: 1-800-419-1473
Toll-free fax: 1-877-832-4943 (claims only)
Email: osgli.claims@prudential.com (claims only)

Overseas:
Phone Number: 973-548-5699
Fax Number: 973-548-5300
Mailing Address:
80 Livingston Ave
Roseland, NJ 07068

General Contact Information

Office of Servicemembers’ Group Life Insurance (OSGLI)
Toll free: 1-800-419-1473
Toll-free fax: 1-800-236-6142 (regular)
Email: osgli.osgli@prudential.com

Overseas:
Phone Number: 973-548-5699
Fax Number: 973-548-5300
Mailing Address:
80 Livingston Ave
Roseland, NJ 07068

Family SGLI FAQ's

FSGLI coverage will begin on the date of your marriage. Coverage for children begins on the date of their birth. If you adopt a child, coverage begins on the date of adoption.

Yes. Eligibility for your spouse is based on your status as a service member and your coverage under your SGLI . All active duty members covered under SGLI are eligible to insure their spouses, regardless of whether their spouse is an active duty member, retired or a civilian.

Yes, he will be insured as soon as he becomes a member of your household, provided he is under age 18. He is also eligible if he is between the ages of 18 and 23, if he is pursuing an education at an approved educational institution.

Yes. Your spouse can be insured under both SGLI spousal coverage and his or her own VGLI coverage. Unless you decline coverage for your spouse, he or she will automatically be insured under SGLI spousal coverage and will also be able to maintain his or her own VGLI coverage.

No, there is no FSGLI coverage available under the VGLI program.

Yes, each of you can be insured under both basic SGLI and SGLI family coverage for the maximum coverage amount of $500,000 for each spouse.

Yes. Your spouse and your children will be eligible and at the same premium rate, regardless of health. However, if you decline coverage now and later want to insure your spouse, proof of good health will be required.

Yes. You can later apply for coverage for your spouse by completing a form and providing proof of insurability (proof of good health).

The premium for your spouse will automatically be deducted from your pay until you separate from service. Coverage will continue, at no extra cost to you, for 120 days following your separation from service. You will pay no premiums for your children, since coverage for them is free.

No. Premiums for spousal coverage will not be deducted from the pay of unmarried SGLI policyholders. If you are not married and your records indicate so, no premium will be deducted for spousal coverage.

The military service member is paid the proceeds due to the death of a spouse.

The service member is paid the proceeds upon the death of a child.

The proceeds will be paid to the member who was eligible for coverage the longest. If you are separated or divorced, insurance for your child will be paid to the member who has custody of the child.

No. The beneficiary of the spouse and the child coverage will be the member. If the member were to die before payment could be made, the proceeds of a spouse or child claim would be paid to the member's beneficiary, as designated by the member on the form SGLV 8286.

The FSGLI insurance program was offers family insurance protection that covers military spouses and dependent children of military service members who are themselves insured under the servicemembers' Group Life Insurance (SGLI) program. Look into the benefits of FSGLI for your military family, today.

Conclusion

In conclusion, military families should be looking ahead in order to maintain spouse and child life insurance beyond their service member's career in the military. This can be tricky as service members often are not sure if they will re-enlist each term. Even if a service member is certain they will stay in to retire, life can change and it's important to be prepared for civilian life just in case they change their mind. 

The best thing a military spouse can do to prepare is to purchase supplemental life insurance while their service member is in the military. For an individual assessment based on your situation, you can request a quote or call me today!

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