Insurance Issues for Military Personnel
Members of the armed services can be deployed on short notice, leaving little time to address personal or business affairs, including insurance coverage.
- If you don't already have insurance, ask how a company handles the deployment of policyholders before you buy a policy. By shopping, you may find an insurer who considers your special needs.
- Talk to your agent before you leave to learn when a policy is up for renewal and to arrange to pay your premiums. You may be able to renew a policy early or have your premiums paid by automated bank draft.
- Ask if you can suspend certain coverage while you're deployed.
- Insurance companies may use payment history and continuity of coverage as factors to determine rates and eligibility standards for some types of insurance. If your insurance expires while you're away, you could come home to find companies unwilling to insure you or only willing to do so at a higher rate although this isn't allowed for auto insurance in Oregon.
- You or your family can contact the Oregon Insurance Division if you encounter deceptive insurance sales practices, the policy you purchased was misrepresented to you or you have a complaint or question about the handling of a claim. You can reach the insurance advocates at 503-947-7984 or toll-free at 1-888-877-4894.
Servicemembers' Group Life Insurance (SGLI)
This low-cost group term life insurance is available to all service members on active duty, active duty for training or inactive duty for training and members of the Reserves. Servicemembers' pay a monthly premium for life insurance that is deducted from their pay. (The contribution by members on active duty and members of the Ready Reserve and National Guard, for example, is $28 monthly for $400,000 of coverage.) The policy is automatically activated for $400,000, the maximum possible coverage amount.. A service member can elect lower coverage or no coverage on VA Form SGLV-8286. Coverage is available for spouses; dependent children are automatically insured for $10,000. When released from active duty or the Reserve, members with full-time SGLI coverage can convert their coverage to Veterans' Group Life Insurance (VGLI) or to an individual commercial life insurance policy. Also, designated beneficiaries now receive an additional payment of $100,000 if a service member dies while on active duty.
Learn more about these policies at:
http://www.insurance.va.gov/ or call toll-free: 1-800-419-1473.
Life Insurance For Military Personnel Brochure
Who Needs Life Insurance and How Much?
The need for life insurance depends on your age and responsibilities. Remember that most military service members receive the $400,000 of life insurance unless they opt out. If you opt out of the SGLI plan or want more than $400,000 worth of life insurance, you may ask how much insurance is necessary. Consider:
- Have I already purchased the $400,000 maximum amount available to me through the government-sponsored Servicemembers' and Veterans' Group Life Insurance program?
- Do I really need more than the SGLI plan currently offers?
- What might be the amounts of medical expenses prior to death, burial costs and estate taxes not covered by the military?
- How much of the family income do I provide?
- If I die, how would my survivors, especially my children, get by?
- Does anyone else depend on me financially, such as a parent, grandparent, brother or sister?
- Do I want to set money aside so my children can finish their education if I die?
- How will my family repay debts after my death?
- Do I want to leave money to certain family members or organizations?
- Will there be estate taxes to pay after my death?
- How will inflation affect future needs?
A life insurance needs calculation tool is available on the SGLI Web site: http://www.insurance.va.gov/sgliSite/calcuator/LifeIns101.htm.
If you buy life insurance outside of the SGLI/VGLI military-offered life insurance plans, review the list of exclusions (what's not covered).
Many life insurance policies have a "war exclusion." This means benefits will not be paid if the death is a result of war or the action of a military force. In addition, many life insurance policies contain exclusions about traveling on any non-commercial aircraft or for other activities involving military service.
The Servicemember's Group Life Insurance (SGLI) and Veterans Group Life Insurance (VGLI) policies do not have these types of exclusions.
Basic Types of Life Insurance
There are two basic types of life insurance: term insurance and permanent insurance.
Term insurance covers you for a term of one or more years. It pays a death benefit only if you die in that term. Term insurance generally offers the largest insurance protection for your premium dollar. It generally does not build up cash value.
You can renew most term insurance policies for one or more terms, even if your health has changed. Each time you renew the policy for a new term, premiums may be higher. Ask what the premiums will be if you continue to renew the policy. Also ask if you will lose the right to renew the policy at some age. For a higher premium, some companies will give you the right to keep the policy for a guaranteed period at the same price each year. At the end of that time you may need to pass a physical examination to continue coverage, and premiums may increase.
Term life insurance may be more desirable for people who are starting out, on a budget or have a fixed time period when their objectives call for life insurance.
Permanent insurance (such as universal life, variable universal life and whole life) provides long-term financial protection. These policies include a death benefit and, in some cases, cash savings. Because of the savings element, premiums tend to be higher.
Whole life plans have level premiums, meaning they do not increase as you age. These policies are designed and priced for you to keep over a long period of time. If you don't intend to keep the policy for the long term, it could be the wrong type of insurance for you. Whole life insurance policies develop "cash values". The cash value is one of the guarantee provisions of the policy. Whole life policies may be more desirable for people who need coverage for their entire life. Universal life and variable life policies may require extra premiums in the future to keep the policies in force.
Life Insurance Deceptive Sales Practices and "Red Flags"
- Solicitation of insurance products as "investment" or "savings" products sold as or with savings or investment products.
- Non-military personnel posing as financial counselors or advisors on veterans' benefits.
- Non-military or ex-military or former military personnel acting as investment advisors in a group or classroom.
- Pressure to rush through the application process, to complete an allotment form or to authorize withdrawal of funds from your bank account for the purchase of a life insurance policy.
- Agents selling on the base without authorization from your base solicitations officer or the Department of Defense.
- Agents selling without a valid license from a state insurance department.
- Delays in receiving a copy of the contract.
What happens if your home is vacant? Many homeowners' policies have a "vacancy clause" you could trigger if gone for an extended period. In this event, some or all of your coverage may not apply in the event of a loss. The precise definition of vacancy can vary from policy to policy. Some policies, for example, might not pay claims if your house is unoccupied for 60 days or more. However, many companies offer an endorsement that will provide coverage for a dwelling that is unoccupied for an extended period of time. Consult with your insurance agent or company to learn how the company defines vacancy and whether it will pay claims if a house is unoccupied.
Homeowners' insurance typically covers personal property that you take while traveling, but most policies exclude coverage for damage caused directly or indirectly from war. Ask your agent whether personal items that you take with you during your deployment will be covered if they are lost, stolen, or damaged. The military generally will not pay to repair or replace property that is damaged or lost in military housing or in a war zone.
If you rent out a home while serving, you'll need a landlord's dwelling fire and premises liability policy. Talk to your agent about coverage for your situation.
If you rent property and will not be doing so while you are traveling, you may want to discontinue your renters' coverage and ask about coverage for any personal property you plan to take with you. If you keep renters' insurance, your policy will typically pay to repair or replace personal property you take while traveling. However, most policies exclude coverage for damage caused directly or indirectly from war. Ask your agent or company whether your renters' policy will pay to repair or replace any property you take with you during your deployment.
If you place items in storage, check on the storage unit's coverage and talk to an agent. Homeowner or renters insurance might cover personal property at a storage unit but if you cancel these policies you may want to purchase storage insurance separately. Comparison shop.
- Canceling some or all coverage: Is the vehicle going to be driven while you are away from home? If not, you may want to cancel the auto coverage. Another option is to keep comprehensive coverage to protect the vehicle against damage while it is not being driven and just eliminate liability coverage. Some people store their cars and just keep the comprehensive coverage. If you do this, don't forget to notify your agent when you return and before you drive the vehicle!
- Suspending some or all coverage: If you will be deployed for an extended period of time and no one will be driving your vehicle, you may be able to suspend some or all of your coverage to save on premium payments and to avoid the need for a new application. Canceling a policy will require a new application. Contact your agent or company for the specific laws and policy limitations. Ask if liability coverage, collision coverage, comprehensive coverage, uninsured/underinsured motorist, and personal injury protection coverage can be suspended while you are deployed.
- Policy lapses: If you don't keep insurance on the vehicle and your policy lapses, no insurer can charge you extra for coverage when you reapply unless you violated motor vehicle laws while uninsured.
Active duty personnel have coverage through the military, as do reservists and National Guard members after 30 consecutive days of active service. Many reservists and National Guard members, however, have health coverage for themselves and their families through an employer-sponsored health plan. Some may wish to continue that coverage, particularly for their dependents, during their active duty period. Talk with your benefits administrator at work to learn what will happen with your health coverage if you are called to active duty. While employers are not required to pay the cost of health coverage for you and your dependents while you are on active duty, some employers choose to continue benefits at their current level.
If your employer does not continue paying the cost of your health coverage, you are entitled to continue the coverage at your own cost under federal law. The Uniformed Services Employment and Reemployment Rights Act (prohibiting discrimination against people because of military service) and the Consolidated Omnibus Budget Reconciliation Act (COBRA) both allow you to continue coverage for yourself and your dependents for up to 18 months. However, you must pay the full cost of the insurance plus 2 percent more for administrative costs. Some family members may continue coverage even if others don't. For example, your spouse and/or children could continue coverage even if you do not.
If your employer discontinues your health coverage and you return to the company directly after your military deployment, federal law requires that you be allowed to resume plan membership without any type of waiting period.
Department of Labor
For more information about your rights to coverage under USERRA and COBRA,
contact the U.S. Department of Labor Employee Benefits Administration: 1-866-444-EBSA
Oregon Insurance Division
If you are confused about your dependents' health insurance choices or you worked for an employer with less than 20 employees, call the division's consumer insurance advocates: 503-947-7984 or toll-free at 1-888-877-4894.
Military Consumer Contacts
U.S. Department of Veterans Affairs Benefits
Military Sentinel is a project of the Federal Trade Commission and the Department of Defense used to identify and target consumer protection issues that affect members of the United States Armed Forces and their families. There are links on this site to access the complaints forms, specific to your branch of service.
Oregon Department of Veterans Affairs
Oregon Military Department