What to Consider With Increase in Servicemembers Group Life Insurance

a military child's face is painted in camo colors
Karen Dennis, 81st Force Support Squadron human resources assistant, paints the face of Dominique Cunningham, son of U.S. Air Force Tech. Sgt. Dominique Cunningham, 81st Medical Support Squadron tricare operations and patient administration flight chief, during Operation Hero at Keesler Air Force Base, Mississippi, April 2, 2022. (Kemberly Groue/U.S. Air Force)

Effective March 1, 2023, the Servicemembers' Group Life Insurance maximum benefit increases from $400,000 to $500,000 with automatic enrollment -- troops will have to opt out if they don't want to pay in.

That's an exciting upgrade to an important program. What's also exciting is the accompanying opportunity for those service members who have reduced or declined coverage in the past. They get another chance to make a sensible decision for them and their families. Let's review the bidding.

SGLI remains cost-effective coverage. At only $31 per month, whether you're 18 or 38, SGLI remains a solid value. Of course, that's especially true, considering all the wear and tear military service can have on those who serve. That low monthly premium also covers SGLI traumatic injury protection.

The new coverage is automatic. This is my favorite feature of the change. Once effective, all eligible service members will have their coverage increased to $500,000. That's true even if they had previously declined or reduced coverage. We have all heard stories of individuals who have passed on SGLI to save a little money, only to die and leave their loved ones in financial jeopardy. I've yet to hear a compelling argument for anything less than the full coverage. Thirty-one dollars? Come on, you can do it.

No action required. To drive that home a bit more: Doing nothing may be appropriate, and of course, it's the easy option. There are countless examples of the successful implementation of programs sharing a common characteristic: No action required. To maintain the full $500,000, no action is required. Just do nothing, and that extra peace of mind is yours.

Benefits have outpaced inflation. This has been the longest period between an increase of benefits since the program launched in 1965; the last change was in 2005 and increased the maximum benefit to $400,000. However, if you look at the numbers in the context of inflation, today's SGLI offers a lot more protection than the original. Using the Bureau of Labor Statistics Consumer Price Index (CPI) inflation calculator, if it was tracking with inflation, the initial $10,000 death benefit would only have increased to $95,000 over the 58 years since the program kicked off.

No change to spouse coverage. This welcome adjustment to the SGLI program does not include changes to the optional $100,000 coverage available to spouses through the Family SGLI program. Interestingly, there has been no boost in available benefits to that program since it was established in 2001. As part of a comprehensive protection plan, spouses, whether they work outside the home or not, likely need coverage. This is a blind spot for too many families.

The recent change to SGLI provides a nice boost in benefits and a reminder to review your coverage and your needs.

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