The stresses and uncertainties of military life can be very difficult for families. For most people, a divorce is a difficult emotional process, and a complex legal process. For military members and their spouses, divorce may be even more complicated, both emotionally and legally. There are many important military family law issues that you should be aware of, including life insurance coverage for parents and their children.
Military Life Insurance for Service Members.
Servicemembers’ Group Life Insurance (SGLI) and the Veterans’ Group Life Insurance (VGLI) are government programs offered by the military. The maximum coverage that may be purchased through the SGLI and VGLI programs (or a combination thereof) is $400,000. More specifically, any service member who is active duty, Ready Reserves, or National Guard is eligible for SGLI coverage. This insurance is not mandatory, a service member may opt out of military-offered life insurance coverage.
Although a military member is free to acquire coverage through a private insurer, the coverage is likely to include a war exclusions provision and non-commercial flight exclusion. That means the non-military insurer will not pay on a claim involving a death resulting from war, military force, or military aircraft crash. These exclusions are not found in the SGLI and VGLI military policies.
Importantly, use of the SGLI to insure a child support obligation is not recommended. This is because federal law preemption prevents state court enforcement of a service member’s support obligation if he or she changed the SGLI beneficiary.
Insuring the Spouse and Dependent Children of Service Members.
If a service member is eligible for SGLI, then the Family Servicemembers’ Group Life Insurance (FSGLI) is also available to insure the death of the member’s current spouse or dependent child. The term “dependent children” includes step-children and certain unmarried adult-children.
For dependent children, the FSGLI coverage is effective when:
The service member enters military duty.
The child is born or adopted.
The step-child begins residing in the member’s household.
The maximum allowable FSGLI coverage is $100,000 and is offered in $10,000 increments. When both spouses are service members, the maximum coverage — SGLI plus FSGLI — is $500,000.
The FSGLI program provides life insurance only, so there is no disability coverage. The service member, exclusively, has an Accelerated Benefits Option (ABO) of up to 50% of the policy amount. The ABO is only available when the spouse or dependent child has a life expectancy of nine months or less. Automatic termination of FSGLI coverage occurs 120 days after the member separates from military service.
Be aware that the service member may reduce or cancel the FSGLI spousal coverage at any time. However, the dependent child coverage may not be reduced for any reason so long as the service member is SGLI insured. The dependent child coverage is set to terminate on the service member’s death, on 120 days after termination of the SGLI coverage, or on 120 days after the child loses his or her status as an insurable dependent.
How Much Life Insurance Coverage is Enough?
When considering how much life insurance coverage is enough, you need to determine what your family’s financial needs are. What percentage do you contribute to your family’s income? Without you, would your children have sufficient resources to live on when the insurance proceeds are included? Do you provide support to your ex-spouse in the form of spousal maintenance (alimony)?
If you are military and seek private insurance, particularly life and disability coverage, make sure that the insurer you select serves the needs of military service members. You should ask these questions before settling on any non-military policy:
Will all or part of my coverage be suspended or cancelled if I’m deployed?
What happens if I am relocated out-of-state, or must be away from my home for a long period of time?
How will the insurer handle any change in my military situation?
Exactly what circumstances or conditions will cause my coverage to lapse?