Who is getting your SGLI benefits?

  • Published
  • By 1st Lt. Mary Ann Mazzarini
  • 374th Airlift Wing
The Servicemembers' Group Life Insurance (SGLI) is a great program of low cost life insurance purchased by the government from private insurers.
Members are automatically insured for the maximum benefit of $400,000, unless a member "opts-out" or explicitly limits coverage in $50,000 increments.
The cost is 70 cents per $10,000 of coverage, or $29 a month for the maximum coverage. In addition to the low cost, the insurance plan, unlike commercial providers contains no clauses on pre-existing conditions such as war, suicide or medical conditions. The SGLI is specifically tailored to meet the needs of the active duty military.
A member may also personally designate the beneficiaries.
In most cases, it is better to designate specific people who you wish to receive the benefits of your SGLI.
If the form indicates "by law" as the intended beneficiary on the DD Form 8286, the member forfeits the right to control the distribution, possibly opening the door to claims from creditors and may result in lengthy litigation by disputing parties.
A "by law" designation may be interpreted differently depending on how the law of the state defines words such as spouse, next of kin and child, which may result in a different outcome than the member intends.
SGLI is not be automatically changed by life events, such as a marriage. As a result, if a member marries, divorces, or has a child, it is incumbent on the member to change the SGLI beneficiaries immediately.
It is also important to understand the difference between principal and contingent beneficiaries.
A contingent beneficiary will only receive the benefits of the insurance policy if all the principal beneficiaries predecease the insured member.
For instance, if a member names their parents as the primary beneficiaries, allotting 50 percent to each and mom dies before the member, then the father will automatically become a 100 percent beneficiary.
If the member wishes instead for mom's portion to go to a contingent upon her early death, then the member must specify in writing on the DD Form 8286 a statement such as "50 percent to my mother, but if she should predecease me than to contingent beneficiary #1".
Finally, if minor children are named as beneficiaries, proceeds will not be released until a guardian is named by a court.
In the case of a divorced member with children to the former spouse, the former spouse may become the guardian over the SGLI property. To avoid this, you can set up a trust in your will that is funded by the SGLI.
Simply naming a trust as the beneficiary on your DD Form 8286 does not set up a trust. The member must create the trust separately and make sure the DD Form 8286 funds the trust.
A second option would be to appoint a custodian for a child under the Uniform Gifts to Minor Act of the member's state. The member should seek legal advice to discuss the advantages and disadvantages of each option.
SGLI is a tremendous benefit, but it has its nuances too. It is important to take time to ensure the benefits are going to the right people in the best manner.
For more information, people can pick up an SGLI pamphlet at the wing legal office in building 315. To see an attorney for legal advice hours are Monday and Wednesday from 9 to 11 a.m. and Tuesday and Thursday from 1 to 3 p.m. Appointments may also be made for emergencies by calling 225-8069. The office of SGLI can be reached at 1-800-419-1473.