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SGLI cost hike aims to deepen reserve fund

Apr. 25, 2014 - 08:50AM   |  
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A recently announced increase in the cost of Servicemembers’ Group Life Insurance of up to $2 per month seems counterintuitive, with fewer active-duty deaths as 13 years of combat wind down.

But officials said the cost increase has nothing to do with the active-duty death rate.

Effective July 1, the monthly premium will increase to 7 cents per $1,000 of coverage, up a half cent from the previous 6.5 cents per $1,000, because of a need to stabilize the SGLI reserve fund.

Veterans Affairs Department officials have been intentionally drawing down the reserve fund since 2008, when they temporarily decreased the premium by a half cent to 6.5 cents per $1,000 of coverage.

At that time, officials said, the reserve fund had been growing because claims for non-combat deaths were lower than anticipated and investment earnings on money held in the reserve fund had increased.

Since then, “reserve funds have decreased significantly, and it is now necessary to adjust the monthly premium rate by a half cent per $1,000 of insurance to ensure the program remains financially strong and competitive,” VA spokesman Terry Jemison said.

Wartime deaths do not factor into VA’s calculations for SGLI premium rates because by law, the service branches pay the cost of wartime claims if the expense is more than the peacetime mortality averages. Thus, active-duty service members are paying premium rates that are comparable to people who are not in the military.

The new rate is effective July 1, but for service members who are paid twice a month, officials from each service branch will determine which paycheck will start the deduction. For those who are paid once a month, the new premium will be reflected in the pay statement they receive Aug. 1, Jemison said.

For those with the maximum SGLI coverage of $400,000, the increase translates into payments of $28 a month, $2 more than before. Coverage is available in increments of $50,000, up to a maximum of $400,000. For a table of premium rates of all SGLI coverage amounts, visit

As before, troops with SGLI coverage also automatically pay an extra $1 per month for Traumatic SGLI coverage, a special program that makes a one-time payment of up to $100,000 to severely injured troops, depending on the nature of the injury. So troops with the maximum SGLI coverage will pay a total of $29 per month.

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