The $500,000 SGLI Surprise: Glass Half Full or Half Empty

by Scott Halliwell, CFP® on Tuesday April 11, 2023
Posted in Category: Life Insurance
Tagged with :

glass half full

Every now and then, something unexpected comes our way. Sometimes, we’re not exactly sure how to interpret it.

Glass Half Full?

Take, for instance, the recent $100,000 increase in the maximum amount of Servicemembers’ Group Life Insurance (SGLI) Service members can purchase. For those in the glass half-full camp, this change (which arrived on March 1, 2023) came with a nice list of positives:

  • Service members can now purchase up to a half-a-million dollars of SGLI coverage.
  • All Service members – including those who had previously declined or reduced coverage – were automatically enrolled at the new maximum $500,000 amount.
  • This coverage doesn’t require answering any medical questions or submitting to any medical testing.
  • The new cost – which includes Traumatic Injury Coverage – is a relatively low $31 per month.

As a CERTIFIED FINANCIAL PLANNER™ professional who has been up close and personal with emotionally distraught survivors many times over my 30-year career, I personally see these things as a win. The glass is not just half full, it’s overflowing from where I sit.

Glass Half Empty?

That said, I realize not everyone views the world through my personal finance lens. In fact, there are those in the glass half-empty camp who have highlighted what they think are at least two significant negatives of this change.

First, they say, you had no choice. Your coverage was automatically increased to $500,000 of coverage. This was true even if you had previously opted out of the coverage. As if that wasn’t bad enough, they say, its cost of $31 a month comes directly out of your paycheck…and you now can’t use that for other things.

So, who’s right? My friends who received the gift of extra coverage, or those who were once again forced into something they didn’t want.

The Best of Both Worlds

Personally, I think it’s both. Yep…both.

First, I haven’t suddenly changed my mind since I wrote that list of potential positives four short paragraphs ago. I really do think those are great things, especially if you’re a member of the large population of Americans who don’t have enough life insurance. The fact is people often need more insurance than they think, so a little forced extra coverage might not be a bad thing.

Still, I do acknowledge the “forced” thing I just mentioned. It’s true that people weren’t given a choice and it’s also true that if they didn’t do anything, thirty-one bucks a month would now no longer be available to purchase an overflowing glass of anything, because it would be purchasing life insurance instead. But here’s why I don’t see these things as all that bad — you can reduce the coverage any time you want. This means the only thing anyone was forced to do was reduce their coverage if they didn’t want all $500,000. Even better, though the new coverage amount started on March 1, 2023, Service members had the entire month of March to make changes and not have to pay the higher amount.

Awareness for the Win!

Finally, the other positive thing I think came from this change is that it prompted conversations, articles, and blog posts like this one…all of which hopefully caused people (perhaps even you?) to think about their life insurance needs and coverage at a time they otherwise might not have. Until next time — cheers!


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