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Frequently Asked Questions About the July 1, 2006 Premium Rate Changes
What is the new basic SGLI premium rate?
When did the new premium rate take effect?
Why did my basic SGLI premiums increase?
When was the last time SGLI premium rates changed?
Did the Traumatic Injury Protection coverage (TSGLI) under SGLI
program cause the premium increase?
What age brackets saw a decrease in Family SGLI premiums?
When did the new premium rates take effect?
Why did Family SGLI premiums decrease?
The new SGLI premium rate is 7 cents per month per $1,000
of coverage. This will increase the monthly premium rate for a member
with maximum
coverage of $400,000 from $27.00 to $29.00. (The premium includes an
additional $1.00
per month for Traumatic Injury Protection coverage (TSGLI), which is
mandatory and added automatically.) Follow this link to view
SGLI premium rates at each coverage
level.
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The new premium rate took effect on July 1, 2006. Members will see
a change in the deduction from their pay for the first time in July
2006. Members drilling for points or not receiving pay for other reasons
will
be billed by their service for the higher premium beginning in July
2006.
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SGLI premiums increased because the old SGLI premium rate was
below the “break-even” point. This means that the premiums collected were not enough to cover the cost of peacetime claims. (Note: The cost of wartime SGLI
claims is borne by the uniformed services, not by service members.)
In July 2003, VA substantially reduced the premium rate for basic SGLI
from 8 cents per $1,000 of insurance per month to 6.5 cents per $1,000
per month. That premium reduction was implemented to reduce surplus
reserve funds in the program. With this essentially accomplished, a
slight increase
in the SGLI premium rate is now necessary in order for the program
to remain in sound financial condition.
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No. The implementation of the new TSGLI coverage had no impact on
the decision to increase the SGLI premium. Funding for TSGLI is
completely separate from basic SGLI and a separate premium ($1.00 per month)
is
charged.
All age brackets saw a decrease in Family SGLI Premiums as follows:
| Under 35 |
.06 |
.055 |
$5.50 |
| 35 - 39 |
.075 |
.07 |
$7.00 |
| 40 - 44 |
.10 |
.09 |
$9.00 |
| 45 - 49 |
.19 |
.14 |
$14.00 |
| 50 - 54 |
.28 |
.27 |
$27.00 |
| 55 - 59 |
.42 |
.40 |
$40.00 |
| 60 & up |
.54 |
.52 |
$52.00 |
follow this link for a complete listing of
monthly premiums at each coverage level.
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The new premium rates took effect on July 1, 2006. Members saw a change in the deduction from their pay for the first time in
July 2006. Members drilling for points or not receiving pay for other
reasons also saw a change in the amount of their SGLI premiums they beginning in July 2006.
Family SGLI premiums decreased because of “favorable claims experience.” What
this means is that the actual number of claims received for FSGLI benefits
has been less than expected. These lower premium rates will better reflect
the claims experience of the program for each age group.
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