First published on April 17, 2018
Active duty members will receive what’s called Servicemembers Group Life Insurance (SGLI). This insurance will also go to many reservists and guard personnel, but once your service is over and you transition into civilian life, everything changes.
Initially, within a year and four months, you can convert the SGLI benefits to VGLI benefits, or Veterans Group Life Insurance. Once this window expires, you’ll need to secure your own life insurance policy.
SGLI settlement options offer either a lump sum payment or payments that are spread over a 36-month period. Insurers will often offer additional payout options based on a family’s income needs, depending on the type of policy held.
SGLI also offers $100,000 Service Death Gratuity to bring the total maximum payout of a service member to $500,000.
Military members should have life insurance to protect their families, and the options available are:
- Term. Term life insurance is the basic commercial life insurance. You pay for the policy at a given price, and when you die, your beneficiaries will receive a specified amount. If you don’t die within this time period, your coverage expires and you paid out premiums for nothing.
- Whole Life. Whole life insurance requires continued monthly payments, but the policy never expires. Premiums remain consistent, so the younger you get in on a whole life insurance plan, the cheaper the plan will be for the remainder of your life. Money in these accounts is partly invested, and you may receive dividend payouts as a result.
- Universal. A policy similar to whole life insurance, universal life policies do not expire and a portion of the policy will be put towards investments. The key difference is that the policyholder dictates how much of the premium is invested.
- Variable. A variable life insurance policy is also similar to a whole or universal policy. But the key difference is that the policyholder will dictate where the money is invested. A wider range of investment vehicles are also available. Beneficiaries will receive cash from the investments as well as the predetermined life insurance payout.
U.S. military members and veterans can obtain their own life insurance that best matches the potential financial needs of their family. Higher premiums are required for higher total payouts, so it’s vital to discuss your family’s needs with a representative to determine what the best policy is for you.
Canadian military members will be able to choose between term life insurance and permanent life insurance. Military Post Retirement Life Insurance (MPRLIP) is another option that is automatically offered to officers.
But the plan requires that the officer retire with:
- Pension
- General Officers’ Insurance Plan
What’s great about this insurance plan is that it’s fully funded by the Government of Canada. This is a taxable benefit, but it’s a free one that offers 100% of the person’s adjusted annual salary the first year, 75% the second year, 50% the third year and 25% thereafter.
Term 100 life insurance is available to military members, too. This coverage is offered through several providers, and it offers lifetime protection with premiums that never increase.
