Military Families and Life Insurance: Beyond SGLI

Life insurance is one of the most important financial protections for service members and their families. The military provides access to affordable coverage through Servicemembers’ Group Life Insurance (SGLI), but many families don’t realize that SGLI alone may not be enough—especially when it comes to long-term financial security after separation or retirement.

Understanding how SGLI works, what it covers, and where its limitations lie is key to making informed decisions. For many military families, supplementing government-provided coverage with private life insurance ensures lasting peace of mind and protection well beyond the years of active service.

What Is SGLI?

Servicemembers’ Group Life Insurance (SGLI) is a low-cost, term life insurance program available to:

• Active-duty members of the Army, Navy, Air Force, Marines, Coast Guard, and Space Force

• Ready Reserve and National Guard members

• Cadets and midshipmen at service academies

• Commissioned members of the NOAA and U.S. Public Health Service

Administered by the Department of Veterans Affairs (VA) and managed by Prudential, SGLI provides up to $500,000 in life insurance coverage, available in increments of $50,000.

Premiums are deducted directly from your base pay, making it automatic and affordable—just $31 per month for the maximum $500,000 in coverage as of 2025.

Key SGLI Features

• Automatic coverage for eligible service members (unless declined).

• 24/7 worldwide protection—on and off duty.

• Short-term continuation after separation: free coverage for 120 days post-discharge.

• Extension options for those totally disabled at discharge (up to 2 years).

• Traumatic Injury Protection (TSGLI) available as an add-on, paying $25,000–$100,000 for qualifying injuries.

SGLI is simple, inexpensive, and valuable—but it’s not designed to be a complete, lifelong insurance solution.

The Limits of SGLI Coverage

While SGLI is a great foundation, it’s often not enough to cover a family’s total financial needs—especially when you factor in long-term obligations like mortgages, education costs, and income replacement.

Here’s why:

1. Coverage Amount May Fall Short

Financial experts typically recommend life insurance equal to 7–10 times your annual income. For example, a service member earning $70,000 per year would ideally need $490,000–$700,000 in coverage.

While SGLI’s $500,000 limit might cover part of that, it may not fully protect your family’s long-term needs—especially if you have children, a spouse who doesn’t work full-time, or outstanding debts.

2. Coverage Ends When You Leave the Military

SGLI coverage stops 120 days after separation from the military unless you convert it. For transitioning veterans, this can create a dangerous gap in coverage, particularly if health changes make it harder to qualify for affordable private insurance later.

3. No Permanent Coverage or Cash Value

SGLI is term life insurance, meaning it provides a death benefit but no savings or cash accumulation. Once it ends, there’s no residual value or long-term growth component—unlike some private permanent life insurance options.

4. Spousal and Dependent Coverage Is Limited

Through Family Servicemembers’ Group Life Insurance (FSGLI), you can add coverage for spouses and children—but the limits are modest:

• Spouses: Up to $100,000 (cannot exceed the service member’s coverage).

• Children: $10,000 each, at no additional cost.

For most families, that’s insufficient to replace income, cover childcare, or manage household expenses in case of tragedy.

What Happens After SGLI Ends: Your Options

When you leave the military, you have two primary choices to continue your life insurance coverage:

1. Veterans’ Group Life Insurance (VGLI)

VGLI allows you to convert your SGLI coverage into a renewable term life policy without a medical exam—as long as you apply within 240 days of separation.

• Coverage amounts: $10,000 to $500,000 (in $10,000 increments).

• Premiums: Based on age and coverage level; they increase every five years.

• Conversion: You can later convert VGLI to a permanent private policy with participating insurers.

Pros:

• Guaranteed acceptance within 240 days of discharge.

• Easy continuation of existing coverage.

Cons:

• Premiums rise significantly as you age.

• Only term coverage—no cash value or investment growth.

2. Convert SGLI to a Private Life Insurance Policy

Another option is to convert your SGLI directly to an individual policy with a participating insurer (without medical underwriting if done within 120 days). This gives you access to permanent life insurance options, which can offer lifelong coverage and potential cash value accumulation.

However, conversion premiums are often higher than traditional private market rates, so many veterans explore fully underwritten policies separately for better pricing and customization.

Why Supplemental Private Coverage Makes Sense

While SGLI (and later VGLI) offer critical baseline protection, private life insurance can fill the gaps—providing flexibility, higher limits, and lifetime coverage.

Here’s how private coverage complements military benefits:

Private term life is a good fit for those wanting affordable, high-coverage protection for a set period (like until children are grown or a mortgage is paid).

Permanent life insurance—like whole life or indexed universal life—works for long-term goals, offering both a death benefit and a cash value that grows tax-deferred, potentially serving as a supplemental income source in retirement.

Coordinating SGLI with Private Coverage

If you’re currently serving, you don’t have to choose one or the other—you can carry both. In fact, many financial advisors recommend maintaining your SGLI coverage while adding a private policy that can continue post-service.

Steps to consider:

1. Assess your family’s total financial needs—income replacement, mortgage, education, and future expenses.

2. Calculate your coverage gap. Subtract your SGLI benefit from the total coverage you’d ideally need.

3. Apply for private coverage while still healthy. Locking in rates early can save thousands over time.

4. Keep SGLI active until your private policy is in place. This ensures continuous protection.

Tips for Choosing the Right Supplemental Policy

• Compare multiple insurers. Rates vary widely, especially for military families with unique risk factors.

• Ask about deployment exclusions. Most modern policies cover service members, but confirm before signing.

• Consider convertibility. Choose term policies that can later convert to permanent coverage without new medical exams.

• Coordinate with your spouse’s coverage. Both partners should have policies reflecting their contributions and financial roles.

Example Scenario: Why Supplemental Coverage Matters

Let’s say Captain James, a 35-year-old Army officer, earns $80,000 annually and has a spouse and two children. His SGLI covers $500,000.

If James were to pass away, that $500,000 would help his family manage expenses—but it likely wouldn’t replace his income for long:

• $500,000 ÷ $80,000/year = about 6 years of income replacement.
  After that, the benefit is gone, and the family could struggle financially.

By adding a $1 million 20-year private term policy, James ensures his family would have more than enough to cover long-term goals—like college tuition and mortgage payments—should anything happen.

The Bottom Line

SGLI is one of the best benefits available to military personnel—it’s affordable, convenient, and provides crucial protection during service. But it was never meant to be a complete solution for lifelong coverage.

For most military families, supplementing SGLI with private life insurance ensures that your protection continues long after you hang up the uniform. It bridges coverage gaps, locks in long-term affordability, and gives you more control over your family’s financial future.

If you’re currently serving or planning to separate soon, take the time to review your coverage now. The earlier you plan, the easier—and cheaper—it is to secure the peace of mind you and your loved ones deserve.