Members of the Military Not Always Made Aware of Insurance Benefit
Several laws in Illinois are designed to protect service people called to duty, and their families. The State of Illinois has made allowances in various rules and laws to ease immediate responsibilities for service men and women called to duty. The goal of these provisions is to prevent financial and other hardship that might result from active duty in the United States military.
Many members of the armed services, who are eligible for the Servicemember’s Group Life Insurance (SGLI), are often not informed of this benefit, or they receive only limited information about the SGLI coverage available for themselves and their family members.
This is especially the case during mobilizations and deployments when time is often limited, and people are in a hurry. It is important that service members are aware that eligible beneficiaries of SGLI proceeds are any persons or legal entities designated by them on a VA Form SGLI 8286.
A service member has the absolute right to choose a beneficiary. Family members, however, do not have such a right. The service member is the beneficiary of the spousal SGLI policy. The service member is also the beneficiary of a child’s SGLI policy.
Like all insurance policies, SGLI is independent from a service member’s will. An insurance policy is a contract between the service member and the insurance company. Although insurance proceeds are included in the gross estate, the will does not determine the beneficiaries of an SGLI policy unless the estate or a testamentary trust is the designated beneficiary.
Therefore, it is critical that service members keep beneficiary designations current. Changes such as marriage, divorce, and the birth of children are good reasons to update an SGLI policy.
When choosing to name minor children, service members should consider designating a trustee (using a living or testamentary trustee) or financial custodian (under the Uniform Gifts/Transfers to Minors Act). Otherwise, SGLI proceeds will not be released and used for the benefit of a minor until an adult, acting on behalf of the minor, petitions a court to be appointed the guardian for the SGLI proceeds. The trustee is named as the beneficiary and manages the proceeds on behalf of minor children.
Any area military base can provide assistance to service personnel and their families through the Legal Assistance Office. Further information is also available in a free brochure from the Illinois State Bar Association entitled “Called to Duty.”
Note: This information was prepared as a public service by the Illinois State Bar Association. Every effort has been made to provide accurate information at the time of publication. For the most current information, please consult your lawyer. If you need a lawyer and do not have one, visit our lawyer referral page.
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