A Primer on Military Death Benefits

Warning Order

While most service members are aware of their SGLI benefits, they are often unaware of significant additional benefits provided to the survivors of service members who lose their lives on active duty or conducting training or operations with the National Guard or Reserves.  In this article, I lay out the details of the major financial benefits offered to survivors.  The information is especially useful to inform the insurance portion of a financial plan.  Many families will find these benefits sufficient, while others may not and may want to consider additional insurance policies.

Situation

All members of the military are (or should be) aware the life insurance benefit offered by the Servicemembers’ Group Life Insurance (SGLI) if the individual dies while serving on active duty or in inactive training.  The military offers many additional, but less known benefits to survivors of service members that provide significant financial assistance in the event of a loss.  These programs, which include the Death Gratuity, Dependency and Indemnity Compensation, TRICARE, and BAH, help surviving spouses and children through the financial challenges associated with loss without requiring them to go to friends and family to ask for financial assistance. These programs are available to active duty personnel and qualified members of the reserves or national guard (most, but not all, qualify).  Although a sensitive and morbid subject, service members face significant risk in training and, of course, during combat.  A little knowledge in this area can go a long way toward helping unfortunate families focus on the emotional side of coping with loss.

SGLI

I’ll start off with the most known benefit, SLGI.  It is a group life insurance policy available to service members on active duty and qualified members of the national guard and reserves.  Available in increments of $50,000 up to a maximum of $400,000, it costs about seven cents per thousand dollars.  While the price is similar to many term life insurance policies, it pays out in the event of death while supporting military operations, while most civilian policies do not.  Servicemembers are automatically enrolled in the program to receive the maximum benefit but may elect other amounts.  The benefit payment is directed toward a selected beneficiary or beneficiaries as determined by the service member prior to death and is not taxable at the state or federal level.

Death Gratuity

The first of these lesser-known benefits is the Death Gratuity.  Paid by the individual’s branch of service, this benefit results in a $100,000 tax-free payment to beneficiaries selected by the service member.  If an election were not made, the payment would be paid to the surviving spouse or to surviving children if there is no spouse.  If the service member has no spouse or children, additional rules determine the beneficiary.  Service members can select their death gratuity beneficiary by updating their DD Form 93, Record of Emergency Data.

Dependency and Indemnity (D & I) Compensation

This benefit comes in the form of monthly payments to a surviving spouse or children.  A surviving spouse will receive $1,283 per month for the rest of his or her life as compensation for the service members death.  The spouse will lose that benefit if he or she remarries before attaining the age of 57.  Additionally, an eligible spouse with dependent children under the age of 18 will receive an additional $317 per child per month until that child turns 18.  All of these payments are tax-free.

If a service member does not have a surviving spouse but does have surviving children, the children are eligible to receive the full compensation ($1,283 per month) if they are unmarried and under the age of 18 (or under 23 if attending school).

TRICARE

The surviving family of a service member will be eligible to continue receiving TRICARE benefits.  For the first three years following the service member’s death, TRICARE is offered at the active duty family member rate.  After three years, the surviving spouse can continue benefits at the retiree rate, with children remaining eligible for the plan until they turn 21.

Basic Allowance for Housing

Surviving family members are eligible for 365 days of additional housing benefits after the service member’s death.  If the family lives in government housing, they can remain in that home for 365 days.  If they live off of a military installation and the service member was eligible for BAH, they will receive BAH for 365 days.

Coordinating Instructions

As you can see, surviving family members receive significant financial benefits in the form of life insurance and gratuity payouts, temporary housing, and mostly permanent monthly payments and healthcare.  While these financial benefits are only a small measure compared to the loss of a service member, they provide a way to secure the financial future for the survivors, at least temporarily.  Service members and their families should be aware of these benefits.  The loss of a loved one is stressful and emotional enough; we want to avoid adding financial challenges to the list of stressors facing a grieving family.

Life insurance is a critical part of any financial plan.  For most people, including service members and their families, life insurance insures against the risk of an early death during a period when assets are not sufficient to replace a person’s lost income, pay off debts, or send children to college.

While selecting an appropriate level of life insurance coverage is the topic of a separate article, I’d like to demonstrate the equivalent level of insurance provided by SGLI, the Death Gratuity, and D & I Compensation.  SGLI and the Death Gratuity add up to $500,000; this math was simple.  For a surviving spouse with no children, the $1,283 per month is equivalent to about $300,000.  With one dependent child, the equivalent is $380,000, with two children, $460,000.

I calculated the D & I insurance equivalent by annualizing the payments and multiplying by 20, which is a factor I often use to determine the income replacement capability of an insurance payout, depending on the circumstances.   In total, a service member with a spouse and no children is insured at an equivalent to an $800,000 policy.  Add in a dependent child, and that amount increases to $880,000 and so forth.  Whether that amount is sufficient is completely dependent on that family’s overall financial picture.

Command & Signal

In this article, I’ve outlined the major benefits offered to survivors of a service member who dies while on active duty or conducting military training.  Many of these benefits are applicable in additional scenarios, but I’ve left out that information for the sake of simplicity.  Many official and unofficial websites provide detailed information on who qualifies for these benefits under various circumstances.  Often, the rules are quite inclusive, avoiding the tragedy of service members losing benefits due to technicalities.

Other Resources

DFAS SGLI Overview

SGLI Myths & Rumors

Death Gratuity Overview

D & I Overview

BAH for Survivors

Surviving Family Benefits | Military.com

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