When military members research their insurance options, they can encounter conflicting information in the media, on military bases, among many chains of command, in financial training and from military support services like Family Support and Readiness Centers. In general, there seems to be two conflicting perspectives about what coverage military members need.
One perspective promotes the Servicemembers Group Life Insurance (SGLI) as the only necessary option. When members join the military, they are automatically enrolled in the SGLI for the maximum amount of coverage and premiums are automatically deducted from their military pay. From this perspective, many outlets view SGLI as the only life insurance that members need and insurance from private insurers is often criticized.
In a recent CNN article entitled "Report: Private firms still selling unsuitable insurance to troops," CNN Senior Producer Charles Keyes discusses a new report by the Inspector General. The report describes the state of life insurance sales to military personnel five years after new laws were instituted to restrict the ability of private insurers to sell insurance in the military market. According to the article, the Inspector General found that insurance agents persuaded personnel "to buy insurance they may not need or be able to afford." The article recognizes that "All military personnel are automatically enrolled in a life insurance policy administered by the Veterans Administration from their first day of training or active duty."
On the other hand, another perspective recognizes that the SGLI may not be enough insurance coverage for some military members. Proponents of this perspective also highlight the fact that the SGLI is not a permanent insurance solution. SGLI terminates 120 days after service at which point members can convert their SGLI to Veterans Group Life Insurance (VGLI), which can be very expensive and increases in cost over time. Another option is for members to find insurance from a private insurer.
In an article on Military.com entitled "Beyond SGLI," Mike McHugh discusses the limitations of the SGLI and suggests that members should also research other options offered by private insurers. Captain Mike McHugh graduated from the Naval Academy in 1968, served in the Navy as a Submarine Officer, and retired after 30 years of service. In his article, when describing the SGLI, Mike McHugh said, "SGLI is not enough protection for a young growing family and it will terminate when you leave the service; long before you need it." He goes on to describe members options after leaving the military. "SGLI is very generous in providing you with coverage for free for 120 days after you leave active duty, but then it is gone. You do have an opportunity to convert over to Veterans Group Life Insurance (VGLI) when you separate or retire from active duty. However, if you are healthy, you will find the VGLI premiums to be very expensive and they increase every five years."
Because of the abundance of conflicting information, Trans World Assurance recommends that all military members complete a life insurance needs assessment.
Trans World Assurance President Charles Royals states, "Military members may be overwhelmed and confused when researching life insurance decisions. Each member's individual circumstances and needs are unique. The first step in making these decisions is to do a life insurance needs assessment. The U.S Department of Veterans Affairs provides a Life Insurance Needs Calculator on its website to help guide military members. This calculator can be a helpful guide, but ultimately, members should seek the advice of an insurance or financial planning professional to determine their individual needs. If military members are near retirement or close to separation, the U.S Department of Veterans Affairs website also lists a number of private companies that military members can use to convert their SGLI into a permanent form of life insurance."