thedrifter
06-20-06, 01:27 PM
June 26, 2006
VA to raise life insurance rates
Family member premiums to drop
By Karen Jowers
Times staff writer
Troops will pay more for Servicemembers’ Group Life Insurance starting July 1, Department of Veterans Affairs officials announced June 14.
At the same time, premiums under the separate SGLI program for family members will drop across the board, VA officials said.
The increases in standard SGLI for service members will vary depending on the amount of coverage a member has. Monthly premiums for standard SGLI coverage for those in uniform will increase to 70 cents per month per $10,000 of coverage — 5 cents more per $10,000 than current monthly premiums.
For the 94.3 percent of troops who carry maximum coverage of $400,000, that means the monthly cost will increase by $2, to $29 from $27.
Monthly SGLI premiums, which are deducted from basic pay, include $1 for the Traumatic Injury Protection coverage that took effect Dec. 1.
Under a change implemented last summer, the Pentagon pays a special allowance to troops serving in designated combat zones that offsets the cost of premiums for the first $150,000 in SGLI coverage.
Under the looming July 1 increase in premiums, troops in combat zones who carry the maximum $400,000 in coverage will pay $18.50 in monthly premiums, rather than the normal full rate of $29.
Decreases in the cost of coverage for spouses under the Family SGLI program vary by age.
For example, monthly premiums for the maximum $100,000 in coverage for a spouse under age 35 will decrease to $5.50 from $6.
The monthly cost of maximum coverage for the 45-to-49 age group will drop to $14 from $19.
An official with the Office of Servicemembers’ Group Life Insurance said the increase in standard SGLI premiums for service members is not related to death insurance benefits paid for troops who die in the Iraq and Afghanistan war zones.
By law, the cost of those claims is borne by the services, not by service members, said Stephen Wurtz, deputy assistant director for insurance at the VA.
The rate of peacetime deaths has remained relatively stable for 10 years, he said, at about 0.5 per 1,000 service members.
The last time SGLI premiums were adjusted was 2003, when monthly costs declined from 80 cents per $10,000 to 65 cents per $10,000 because of a surplus in the program’s reserve fund, which serves as a financial safety net for the program.
Premiums were intentionally lowered below the break-even point to drain some of the surplus, he said.
Further raises not expected
At that time, officials did not anticipate further adjustments until at least the end of the decade, Wurtz said. However, that was before maximum SGLI coverage increased to $400,000 from its previous $250,000, which accelerated the need for a premium increase.
Even so, the premium rate has been relatively stable since 1984, when it was reduced from $1.16 per $10,000 to 80 cents.
“The fact that it’s been in the range of 65 cents to 85 cents [per $10,000 worth of coverage] over the last 20 years would indicate we don’t expect any significant changes over the next several years,” Wurtz said.
Family SGLI premiums are decreasing because the relatively new program has had fewer claims than projected, he said.
Ellie
VA to raise life insurance rates
Family member premiums to drop
By Karen Jowers
Times staff writer
Troops will pay more for Servicemembers’ Group Life Insurance starting July 1, Department of Veterans Affairs officials announced June 14.
At the same time, premiums under the separate SGLI program for family members will drop across the board, VA officials said.
The increases in standard SGLI for service members will vary depending on the amount of coverage a member has. Monthly premiums for standard SGLI coverage for those in uniform will increase to 70 cents per month per $10,000 of coverage — 5 cents more per $10,000 than current monthly premiums.
For the 94.3 percent of troops who carry maximum coverage of $400,000, that means the monthly cost will increase by $2, to $29 from $27.
Monthly SGLI premiums, which are deducted from basic pay, include $1 for the Traumatic Injury Protection coverage that took effect Dec. 1.
Under a change implemented last summer, the Pentagon pays a special allowance to troops serving in designated combat zones that offsets the cost of premiums for the first $150,000 in SGLI coverage.
Under the looming July 1 increase in premiums, troops in combat zones who carry the maximum $400,000 in coverage will pay $18.50 in monthly premiums, rather than the normal full rate of $29.
Decreases in the cost of coverage for spouses under the Family SGLI program vary by age.
For example, monthly premiums for the maximum $100,000 in coverage for a spouse under age 35 will decrease to $5.50 from $6.
The monthly cost of maximum coverage for the 45-to-49 age group will drop to $14 from $19.
An official with the Office of Servicemembers’ Group Life Insurance said the increase in standard SGLI premiums for service members is not related to death insurance benefits paid for troops who die in the Iraq and Afghanistan war zones.
By law, the cost of those claims is borne by the services, not by service members, said Stephen Wurtz, deputy assistant director for insurance at the VA.
The rate of peacetime deaths has remained relatively stable for 10 years, he said, at about 0.5 per 1,000 service members.
The last time SGLI premiums were adjusted was 2003, when monthly costs declined from 80 cents per $10,000 to 65 cents per $10,000 because of a surplus in the program’s reserve fund, which serves as a financial safety net for the program.
Premiums were intentionally lowered below the break-even point to drain some of the surplus, he said.
Further raises not expected
At that time, officials did not anticipate further adjustments until at least the end of the decade, Wurtz said. However, that was before maximum SGLI coverage increased to $400,000 from its previous $250,000, which accelerated the need for a premium increase.
Even so, the premium rate has been relatively stable since 1984, when it was reduced from $1.16 per $10,000 to 80 cents.
“The fact that it’s been in the range of 65 cents to 85 cents [per $10,000 worth of coverage] over the last 20 years would indicate we don’t expect any significant changes over the next several years,” Wurtz said.
Family SGLI premiums are decreasing because the relatively new program has had fewer claims than projected, he said.
Ellie