Any reason NOT to drop SGLI?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
Sophia1884
Posts: 179
Joined: Mon Aug 05, 2013 10:23 pm

Any reason NOT to drop SGLI?

Post by Sophia1884 » Mon Aug 12, 2019 11:52 am

Currently, the military offers service members group life insurance. We are currently paying $29/mt for $400K coverage (max available). Once the member retires, they have to switch over to a different gov. insurance which increases payments regularly and is more expensive than the private companies. By staying with SGLI now, the choice after retirement is:

1. Pay higher rates (based on age/health) at a private provider vs. locking in lower rate now.
2. Pay VGLI's increasing rates.

PRO: It's government/military based...so, maybe safer than private providers in case of doomsday type of scenario?

In contrast, with AAMFAA (private, military focused provider) $29 buys $800,000 coverage for 20 yrs.

The goal is to have two term policies: AAMFAA +SGLI ( pay for a different policy once leave military=increase in payments due to age/health) OR AAMFAA + USAA and keep them for the duration of their terms, at today's rates.

Thoughts on dropping the government SGLI coverage?

*Edited title to reflect main question.
Last edited by Sophia1884 on Mon Aug 12, 2019 12:33 pm, edited 3 times in total.

umfan11244
Posts: 104
Joined: Sat Feb 09, 2019 11:06 am

Re: Should we drop SGLI in favor of private life insurance?

Post by umfan11244 » Mon Aug 12, 2019 11:59 am

I would check out term4sale.com. This will give you an idea of rates, which will likely be better than SGLI by a mile. Plenty of other companies offer war zone coverage, so don’t limit yourself.

As far as VGLI, that’s a definite no. You can have several pre existing conditions while beating that rate.

deikel
Posts: 777
Joined: Sat Jan 25, 2014 7:13 pm

Re: Should we drop SGLI in favor of private life insurance?

Post by deikel » Mon Aug 12, 2019 12:11 pm

Maybe I do not fully understand the question:

- you have life insurance for a reason, to insure you that the person(s) left behind to be somewhat cushioned in case of your untimely death - only you can determine what amount of money that should be, but probably not so much needed that the left behinds do not need to work forever anymore...

- if you are in the military and have to 'work' in a warzone, then your chance of this happening has certainly increased over the normal level of the average population (although its worthwhile noting that military deaths have become more and more unlikely over the decades, however disability has increased instead, something else to think about insuring IMO).

- so, I would get insurance from the military AND from private if at all possible for the time you are in the military

- if you are retired from the military (and by definition not working in a war zone anymore), then why do you still need life insurance ? If you are 75 years old, why do you carry life insurance ? What trouble would your death cause that needs insuring at that age (maybe less then 75 if retired early - there are cases of cause, just not very common)

- so the argument of higher cost when out of the military is irrelevant I believe, you would just drop the insurance at that age (early retirement ?) or go shop on the open market again.

- normally the argument for an additional or exclusive insurance outside employment is that if you loose employment you immediately loose insurance, this might also apply to you if you get discharged from the military - as Murphy suggests, you might have your car accident just on that day and be w/o insurance. You might also be disabled from the military and not get favorable rates for your life insurance private anymore (although by far the major cost driver for private life insurance cost is smoking and obesity, avoid those two and you have a good chance for cheap insurance)
Everything you read in this post is my personal opinion. If you disagree with this disclaimer, please un-read the text immediately and destroy any copy or remembrance of it.

Topic Author
Sophia1884
Posts: 179
Joined: Mon Aug 05, 2013 10:23 pm

Re: Should we drop SGLI in favor of private life insurance?

Post by Sophia1884 » Mon Aug 12, 2019 12:32 pm

umfan11244 wrote:
Mon Aug 12, 2019 11:59 am
I would check out term4sale.com. This will give you an idea of rates, which will likely be better than SGLI by a mile. Plenty of other companies offer war zone coverage, so don’t limit yourself.

As far as VGLI, that’s a definite no. You can have several pre existing conditions while beating that rate.
That's my opinion on the VGLI too- definitely not planning to go with that option, just trying to see why people keep SGLI. I'm not finding/seeing the risks of dropping it but feel that it's offered for a reason? Why would people pay for it if there are better options available (AAFMAA)?

krafty81
Posts: 207
Joined: Thu Jul 05, 2018 2:01 pm
Location: San Diego, CA

Re: Any reason NOT to drop SGLI?

Post by krafty81 » Mon Aug 12, 2019 5:58 pm

After you retire go with Navy Mutual Aid term, Best deal out there.

User avatar
Nords
Posts: 228
Joined: Sun May 20, 2007 9:55 pm
Location: Oahu
Contact:

Re: Should we drop SGLI in favor of private life insurance?

Post by Nords » Sun Aug 18, 2019 2:05 pm

Sophia1884 wrote:
Mon Aug 12, 2019 12:32 pm
umfan11244 wrote:
Mon Aug 12, 2019 11:59 am
I would check out term4sale.com. This will give you an idea of rates, which will likely be better than SGLI by a mile. Plenty of other companies offer war zone coverage, so don’t limit yourself.

As far as VGLI, that’s a definite no. You can have several pre existing conditions while beating that rate.
That's my opinion on the VGLI too- definitely not planning to go with that option, just trying to see why people keep SGLI. I'm not finding/seeing the risks of dropping it but feel that it's offered for a reason? Why would people pay for it if there are better options available (AAFMAA)?
Sophia, the biggest difference is guaranteed insurability.

Significant disability or health issues may be uninsurable by companies like AAFMAA (let alone USAA) without manual underwriting and high premiums. Meanwhile SGLI converts to VGLI without even a physical exam.

That's why SGLI and VGLI premiums are higher: they don't carry war exclusions, and they're guaranteed insurability.

SGLI is a cheap guarantee until you're out of the military and know what type of civilian insurance you can buy.
* | * | Please see my profile. I don't read every post, so please PM or e-mail me to get my attention.

User avatar
friar1610
Posts: 1522
Joined: Sat Nov 29, 2008 9:52 pm
Location: MA South Shore

Re: Should we drop SGLI in favor of private life insurance?

Post by friar1610 » Sun Aug 18, 2019 2:11 pm

Nords wrote:
Sun Aug 18, 2019 2:05 pm
Sophia1884 wrote:
Mon Aug 12, 2019 12:32 pm
umfan11244 wrote:
Mon Aug 12, 2019 11:59 am
I would check out term4sale.com. This will give you an idea of rates, which will likely be better than SGLI by a mile. Plenty of other companies offer war zone coverage, so don’t limit yourself.

As far as VGLI, that’s a definite no. You can have several pre existing conditions while beating that rate.
That's my opinion on the VGLI too- definitely not planning to go with that option, just trying to see why people keep SGLI. I'm not finding/seeing the risks of dropping it but feel that it's offered for a reason? Why would people pay for it if there are better options available (AAFMAA)?
Sophia, the biggest difference is guaranteed insurability.

Significant disability or health issues may be uninsurable by companies like AAFMAA (let alone USAA) without manual underwriting and high premiums. Meanwhile SGLI converts to VGLI without even a physical exam.

That's why SGLI and VGLI premiums are higher: they don't carry war exclusions, and they're guaranteed insurability.

SGLI is a cheap guarantee until you're out of the military and know what type of civilian insurance you can buy.
Nords' answer is spot-on. When I retired from the Navy I was a bit concerned about a medical situation that could have potentially been problematic for buying insurance. So I took VGLI for a couple of years and then dropped it when the situation satisfactorily resolved itself and I also determined I no longer needed insurance beyond what I already had w/o VGLI.
Friar1610

bovineplane
Posts: 61
Joined: Wed Jul 26, 2017 5:24 am

Re: Any reason NOT to drop SGLI?

Post by bovineplane » Sun Aug 18, 2019 2:39 pm

You don't have to wait until you leave active duty to apply for a new term policy. I picked up a second policy 8 years ago and am retiring from AD this year. Policy is with USAA. $500k policy for $25/month.

Part of the policy is a military rider that allows upon separation an automatic addition of $400k insurance without additional medical exam. This rider can not be exercises until after separation. For example, my retirement date of 1 January is technically my first day not in the military. I can call usaa 1 January to have the rider applied to provide the coverage that sgli currently covers.

Last week I applied for a second policy to increase my insurance. This policy requires a medical exam which for me is no big deal. A 20 year term policy $500k is $29/month. Will bump me up to $1.4 mil total for under $75/month.

I do not plan on applying for vgli. Rate is not appealing to me.

User avatar
Nords
Posts: 228
Joined: Sun May 20, 2007 9:55 pm
Location: Oahu
Contact:

Re: Any reason NOT to drop SGLI?

Post by Nords » Sun Aug 18, 2019 2:56 pm

friar1610 wrote:
Sun Aug 18, 2019 2:11 pm
Nords' answer is spot-on. When I retired from the Navy I was a bit concerned about a medical situation that could have potentially been problematic for buying insurance. So I took VGLI for a couple of years and then dropped it when the situation satisfactorily resolved itself and I also determined I no longer needed insurance beyond what I already had w/o VGLI.
bovineplane wrote:
Sun Aug 18, 2019 2:39 pm
You don't have to wait until you leave active duty to apply for a new term policy. I picked up a second policy 8 years ago and am retiring from AD this year. Policy is with USAA. $500k policy for $25/month.

Part of the policy is a military rider that allows upon separation an automatic addition of $400k insurance without additional medical exam. This rider can not be exercises until after separation. For example, my retirement date of 1 January is technically my first day not in the military. I can call usaa 1 January to have the rider applied to provide the coverage that sgli currently covers.
That USAA feature is a very good deal if there are health issues.

I get a number of e-mails from servicemembers who are going through their separation physical exams (and their VA disability claims) and finding surprises which would affect their insurability. Unfortunately by the time they learn about these things, they've already been documented in their medical records and their insurer will also be able to learn about them.
* | * | Please see my profile. I don't read every post, so please PM or e-mail me to get my attention.

SueG5123
Posts: 148
Joined: Fri Jan 01, 2016 8:41 pm

Re: Any reason NOT to drop SGLI?

Post by SueG5123 » Sun Aug 18, 2019 8:44 pm

I’m retired Navy, and I spent a large portion of my 23 years active duty working in pay & personnel matters, such as SGLI.

I fully agree that VGLI (post military career insurance) is not competitive with other insurers. SGLI, on the other hand, remains the best option for your military service.

And if I may offer additional rational, SGLI also provides a term insurance policy on your family members while you are in the military. That, too, is worth the small cost.

Cuervo_loco
Posts: 16
Joined: Tue Apr 30, 2019 10:45 pm

Re: Any reason NOT to drop SGLI?

Post by Cuervo_loco » Mon Aug 19, 2019 9:09 pm

Sophia1884 wrote:
Mon Aug 12, 2019 11:52 am

2. Pay VGLI's increasing rates.

Thoughts on dropping the government SGLI coverage?
I’ve been on the Casualty Assistance side of the equation. Consider that SGLI (Prudential) pays your designated beneficiaries within a matter of days no matter the cause of death. I would consider that well worth the money.

Personally, after service I would just do a long duration Term policy since I have no pre-existing conditions which primary allure of VGLI seems to be for.

Topic Author
Sophia1884
Posts: 179
Joined: Mon Aug 05, 2013 10:23 pm

Re: Any reason NOT to drop SGLI?

Post by Sophia1884 » Wed Aug 21, 2019 11:26 am

Cuervo_loco wrote:
Mon Aug 19, 2019 9:09 pm


I’ve been on the Casualty Assistance side of the equation. Consider that SGLI (Prudential) pays your designated beneficiaries within a matter of days no matter the cause of death. I would consider that well worth the money.

Personally, after service I would just do a long duration Term policy since I have no pre-existing conditions which primary allure of VGLI seems to be for.
SGLI seems safe because it's government approved, I'm just not sure if its one of those things that is the "best choice" just because everyone is doing it/has it. That's the question really....perceived best or twice the coverage from respected institutions for the same price? Really appreciate all the thoughts though! As for getting a term policy after service vs now, the major issue is that you're betting you'll be in good health. Seeing as health can be unpredictable, your health today is probably a better indicator of what you should be looking at LI wise than your health in 5-10 years or even tomorrow.

Topic Author
Sophia1884
Posts: 179
Joined: Mon Aug 05, 2013 10:23 pm

Re: Any reason NOT to drop SGLI?

Post by Sophia1884 » Wed Aug 21, 2019 11:48 am

SueG5123 wrote:
Sun Aug 18, 2019 8:44 pm
I’m retired Navy, and I spent a large portion of my 23 years active duty working in pay & personnel matters, such as SGLI.

I fully agree that VGLI (post military career insurance) is not competitive with other insurers. SGLI, on the other hand, remains the best option for your military service.

And if I may offer additional rational, SGLI also provides a term insurance policy on your family members while you are in the military. That, too, is worth the small cost.
Sue, thank you for commenting! If I may ask, how is SGLI different from USAA or AAFMAA coverage? All three have a war zone coverage and only USAA require a med. exam. They seem to be the same in everything but price. With SGLI, $25/mth buys $400,000 coverage. With AAFMAA, $29/mth, buys $800,000 coverage for 20 yrs. It seems to me, and the reason for the original post, is that getting a policy outside of SGLI is the best logical option based on coverage and pricing.

I'm asking the question in case anyone knows something about SGLI that I'm not finding, because financially, it seems to be very clear cut in favor of dropping it for a different LI policy/coverage through (example) AAFMAA.

User avatar
Nords
Posts: 228
Joined: Sun May 20, 2007 9:55 pm
Location: Oahu
Contact:

Re: Any reason NOT to drop SGLI?

Post by Nords » Wed Aug 21, 2019 12:21 pm

Sophia1884 wrote:
Wed Aug 21, 2019 11:48 am
It seems to me, and the reason for the original post, is that getting a policy outside of SGLI is the best logical option based on coverage and pricing.

I'm asking the question in case anyone knows something about SGLI that I'm not finding, because financially, it seems to be very clear cut in favor of dropping it for a different LI policy/coverage through (example) AAFMAA.
You mean, other than the guaranteed insurability of converting SGLI to VGLI? If you drop SGLI then you can't convert to VGLI without a medical exam.

You'd also want to ask USAA, AAFMAA, and the other insurers what they'll charge for a medical history of cancer, respiratory issues (burn pits), high blood pressure, cardiac issues, or anything else in your medical record. They may not require a medical exam but they're entitled to ask for your medical history.
* | * | Please see my profile. I don't read every post, so please PM or e-mail me to get my attention.

dsjohns
Posts: 6
Joined: Fri May 25, 2018 2:19 pm

Re: Any reason NOT to drop SGLI?

Post by dsjohns » Wed Aug 21, 2019 12:34 pm

I think the benefit for SGLI for me is that I couldn't get over $1M of term coverage that didn't have war/terrorism exclusion. So I hold a 25 year policy for $1M at $63/mo, and then pay the SGLI also. I'm a guard guy, but have a deployment coming up. Can't be too careful I guess.

Topic Author
Sophia1884
Posts: 179
Joined: Mon Aug 05, 2013 10:23 pm

Re: Any reason NOT to drop SGLI?

Post by Sophia1884 » Wed Aug 21, 2019 3:38 pm

Nords wrote:
Wed Aug 21, 2019 12:21 pm
Sophia1884 wrote:
Wed Aug 21, 2019 11:48 am
It seems to me, and the reason for the original post, is that getting a policy outside of SGLI is the best logical option based on coverage and pricing.

I'm asking the question in case anyone knows something about SGLI that I'm not finding, because financially, it seems to be very clear cut in favor of dropping it for a different LI policy/coverage through (example) AAFMAA.
You mean, other than the guaranteed insurability of converting SGLI to VGLI? If you drop SGLI then you can't convert to VGLI without a medical exam.

You'd also want to ask USAA, AAFMAA, and the other insurers what they'll charge for a medical history of cancer, respiratory issues (burn pits), high blood pressure, cardiac issues, or anything else in your medical record. They may not require a medical exam but they're entitled to ask for your medical history.

You raise good questions -I know AAFMAA waives medical history questions up to a certain age, not sure about USAA. Absolutely agree about that need to avoid that conversation, hence the idea of having a 25 yr term policy or two now to lock in low cost based on age/health and cover the present-future responsibilities without needing to add coverage later (be asked medical history questions) or pay the hefty VGLI prices.

Long term, extra $10-20 per month/ SGLI vs others may not make a big difference and I'm not sure if there is a "right" answer about the value of SGLI vs. locked in term rate. Was just curious to see if why folks keep it seeing as the coverage seems to be better with outside options.

Cuervo_loco
Posts: 16
Joined: Tue Apr 30, 2019 10:45 pm

Re: Any reason NOT to drop SGLI?

Post by Cuervo_loco » Wed Aug 21, 2019 6:47 pm

Sophia1884 wrote:
Wed Aug 21, 2019 11:48 am
If I may ask, how is SGLI different from USAA or AAFMAA coverage? .

I'm asking the question in case anyone knows something about SGLI that I'm not finding, because financially, it seems to be very clear cut in favor of dropping it for a different LI policy/coverage through (example) AAFMAA.
It’s worth knowing that depending upon your state of residence, consumer life insurance policies (except *GLI) have a contestability period of up to two years. If you die during that period your insurer may investigate and delay or deny coverage based upon any findings. After that, typically you enter a beneficiary guaranteed coverage status unless specified exclusions exist. More info.

SueG5123
Posts: 148
Joined: Fri Jan 01, 2016 8:41 pm

Re: Any reason NOT to drop SGLI?

Post by SueG5123 » Thu Aug 22, 2019 6:57 am

Sue, thank you for commenting! If I may ask, how is SGLI different from USAA or AAFMAA coverage? All three have a war zone coverage and only USAA require a med. exam. They seem to be the same in everything but price. With SGLI, $25/mth buys $400,000 coverage. With AAFMAA, $29/mth, buys $800,000 coverage for 20 yrs. It seems to me, and the reason for the original post, is that getting a policy outside of SGLI is the best logical option based on coverage and pricing.

I'm asking the question in case anyone knows something about SGLI that I'm not finding, because financially, it seems to be very clear cut in favor of dropping it for a different LI policy/coverage through (example) AAFMAA.
I am not familiar with AAFMAA. At some point near the twilight of my service, I added USAA term insurance for a seamless post career option , as I was aware of the cost-benefit of VGLI and didn’t want to go that route. USAA did insist on a physical (sent a nurse to my house), which I regarded as something of a hassle. I am now at year 19 of my original 20 year level term policy with USAA, and waiting to see the premium increase.

SGLI puts the GROUP in “group life insurance,” to be sure. Possibly it is not for everyone’s situation. But I guess I would always default to it. There is no wartime exclusion. There is no waiting or dickering for benefits. There is (or used to be) a 120 day look -back period that covered you even if you had left the military months earlier. Enrollment is not only automatic, it is presumed — so opting out will be swimming upstream, administratively. (Expect a lot of cautionary lectures and signing of acknowledgement forms.)

Obviously, I survived my service and my beneficiary never made a claim. However, the spousal coverage was introduced the same year my husband was diagnosed with cancer. He passed away three months after I retired, and SGLI (Prudential) was Johnny-on-the-spot with the benefit, whereas I had to wrestle with the other term insurer (which even made a point of deducting the month-of-death premium from the benefit).

Post Reply