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Life Insurance

Money-saving life insurance strategies

2021-01-07

Defining Your Coverage

SGLI: Servicemembers Group Life Insurance, which provides $400,000 of life insurance for $24/month. You must have SGLI to get TSGLI or FSGLI.

TSGLI: Traumatic SGLI, which costs $1/month to provide up to $100,000, if your service member suffers a traumatic injury, including loss of limb, sight, or other trauma.

FSGLI: Family SGLI, which provides up to $100,000 of coverage on spouses for $4.50/month for spouses under 35 (and slightly more for older spouses). It also includes $10,000 coverage on each child.

Is that enough?

It depends on your family’s needs, but $400,000 would only last for about 8 years. Even if it was invested prudently, and combined with DIC (Dependency and Indemnity Compensation), it may not be enough.

Can I do better?

AAFMAA provides Level Term insurance for the American Armed Forces, with $50,000 - $800,000 of coverage, premiums that never increase, and protection that stays with you even after you leave the military. Most importantly, it comes with AAFMAA’s exclusive Survivor Assistance Services. At the time of a member’s death, AAFMAA will coordinate with Social Security, the VA, and others to ensure that your family gets all of the military, veterans, social security, and other benefits to which they are entitled.

Should I cancel SGLI?

You should not necessarily cancel your SGLI entirely. Instead, do the following:

  • Apply for AAFMAA coverage at $400,000
  • Reduce your SGLI to $100,000 (which would cost just $6.00 per month)
  • Keep your TSGLI and spouse coverage at $100,000 (which would cost an additional $1.00 per month)

The total cost is less than you are paying now and provides a total of $500,000 of life insurance which continues after the military and includes survivor assistance services. The AAFMAA Level Term policy includes $10,000 of child’s life insurance, so children would have a total $20,000 of coverage.

Payments could still come from pay reflected on your LES, just as they do today. Apply online or call (866) 311-1812 to begin AAFMAA Level Term I insurance for $400,000. Then, reduce your SGLI to $100,000 online through the SGLI Online Enrollment System (SOES) or by filling out the Servicemembers’ Group Life Insurance Election and Certificate (SGLV 8286) and giving it to your unit’s personnel officer. Once that's complete, you just have to submit DD Form 2558 to start your AAFMAA allotment.

Also members of the American Armed Forces who are E-5 through O-4 and start a $250,000 or greater life insurance policy by allotment can get a $5,000 Career Assistance Program (CAP) loan at just 1.5%.