The Department of Veterans Affairs and Department of Defense offer a variety of insurance policies designed to provide service members and veterans with benefits that they may not be able to receive from private entities, given the risk involved in military service. For the VA-administered programs listed below, the service member is automatically enrolled and covered at the maximum amount unless the member opts to decline coverage or chooses a reduced coverage amount. For the DoD-administered programs, service members are also automatically enrolled, but coverage amounts vary based on selected base amounts for the program. Surviving family members are encouraged to speak with their casualty assistance officer to determine the benefit level.
Veterans Affairs-administered programs
Servicemembers' Group Life Insurance
With this life insurance program service members pay premiums from their monthly income. It is a low-cost term life insurance protection policy for members of the uniformed services payable in a non-taxable payment. The typical payout upon death is $400,000, but the amount (and subsequent cost) could differ if the service member requested a lesser amount of life insurance or declined coverage in writing. When in active duty or ready reserve status, the coverage amount for SGLI is automatically at the maximum amount. Payment is made to the beneficiaries designated in writing on the election form by the military member and is paid in the manner elected by the military member: either 36 equal payments or one lump sum. Payments are not taxable, to include interest from the time the payment is due until the time the payment is received.
Coverage is paid for through automatic deductions from the service member's pay. Service members not in active duty or ready reserve status can contact the VA to decline coverage or reduce the amount of coverage under SGLI. By declining SGLI, service members are also declining Traumatic Injury Protection Under Servicemembers' Group Life Insurance and Family Servicemembers' Group Life Insurance. Service members who decline or reduce their coverage amounts can reinstate or increase their coverage amounts at a later date, provided they are in good health at the time of the application. Servicemembers' Group Life Insurance does accrue interest at the standard/current government rate from the date of the service member's death through the date of disbursement. More information on the SGLI program, including cost and coverage levels, can be found on the VA's SGLI website.
Traumatic Injury Protection Under Servicemembers' Group Life Insurance
When covered by SGLI, the TSGLI program automatically provides coverage for service members against traumatic injury resulting in certain severe loss. The benefit amount, which is non-taxable, varies depending on the type of loss sustained by the service member as a result of the traumatic injury.
The cost of TSGLI is automatically added to the premium cost for SGLI and is deducted from the service member's pay. The cost of the coverage varies depending on whether the service member is active duty/Reservist with full coverage, Reservist with part-time coverage, or a service member on funeral honors duty or one-day muster duty. More information on the TSGLI program, including costs and coverage amounts, can be found on the VA's TSGLI website.
Family Servicemembers' Group Life Insurance
Through this life insurance program, coverage is automatically provided to spouses and dependent children of service members covered by the SGLI program. Coverage amounts for FSGLI cannot exceed the coverage selected for the service member in SGLI.
Premiums for spouses vary depending on the age of the spouse and the amount of coverage selected. Coverage for dependent children is provided free of charge; however, it is not enough to cover the burial of a child, so the service member may want to consider purchasing additional insurance. Family Servicemembers' Group Life Insurance provides different levels of coverage for spouses (as selected by the service member) and a set coverage amount for each dependent child. More information, including current rates for spouse coverage, can be found on the VA's FSGLI website.
Veterans' Group Life Insurance
After a service member separates from the military, he or she can convert SGLI into VGLI to continue the term life insurance policy coverage but only at a coverage level equal to or less than the coverage level of SGLI at the time of separation. The VGLI pays beneficiaries a tax-exempt payment equal to the level selected by the veteran and must be renewed every five years.
Premiums associated with VGLI are based on the service member's age. More information, including current premium rates and coverage amounts, can be found on the VA's VGLI website.
Department of Defense-administered programs
The Uniformed Services Survivor Benefit Plan
Administered by the Defense Finance and Accounting Service, the SBP allows surviving family members to receive a portion of the service member's retired pay, even if the service member dies while on active duty. Every service member is automatically enrolled in the program at no cost. Income received from the SBP is taxable.
The SBP benefit amount varies depending on the amount of retired pay the service member selected on which to base SBP participation. This dollar amount is known as the base amount and can range from a portion of retired pay to full retired pay. The cost and amount of the benefit vary depending on which category of beneficiary is selected (spouse only, spouse and children, children only and insurable interest), as well as the base amount. More information on the SBP, including costs and amounts of benefits, can be found in the Retired Pay section of the DFAS website.
Reserve Component Survivor Benefit Plan
Similar to the SBP, the RCSBP is an annuity paid to surviving spouses and, in some instances, dependent children of Reserve Component service members who elected to enroll in the program, have died, and had completed the satisfactory years of service qualifying them for retirement pay. As with the SBP, surviving spouses and/or dependent children can receive a portion of the elected RCSBP annuity base amount. Income received from the RCSBP is subject to income tax. More information on the RCSBP can be found on the DFAS website.
Special Survivor Indemnity Allowance
Surviving spouses who are beneficiaries of the SBP annuity and whose SBP annuity is partially or fully offset by the VA Dependency and Indemnity Compensation may be eligible for an additional allowance through the military. This is automatically paid by DFAS and does not require that surviving spouses apply for the allowance. More information on the SSIA can be found on the DFAS website.
Insurance policy premiums and payouts
The premiums and payout amounts for these insurance policies vary depending on the amount of coverage and types of beneficiaries selected. For SGLI, TSGLI and FSGLI, the cost of the premiums is automatically deducted from the service member's pay. For the SBP, the premium is paid through a reduction in the service member's retirement pay.