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SGLI benefits should be decided before problems arise

Servicemembers' Group Life Insurance is a most valuable benefit. In the event of a servicemember's death, SGLI affords a measure of financial protection to those you care about and who need this support. Specifically naming the intended beneficiaries best assures this result as well as prompt payment of the insurance proceeds.

SGLI is a contract between the member and the insurance provider. It is not controlled by the terms of a will or by a state's laws for distributing property in the event of death without a will. The member holds an absolute right to name each person or entity desired as a beneficiary.

The insurance provider pays the beneficiaries so named. By failing to name beneficiaries, a member gives up control of the disposition of these funds.

Members have used the term "by law" to identify beneficiaries. This designation creates a significant risk of payments to unintended beneficiaries, of delays in payments, and of litigation by persons claiming the member intended they receive the SGLI proceeds or attempting to include themselves within the class covered by the term "by law."

Servicemembers' understanding of common terms like "parents" and "children" may not align with the definitions of these terms in the law. The "by law" designation can result, and too often does, in a federal court identifying the beneficiaries of SGLI proceeds. The court's ability to consider the member's intent will be sorely limited - if he or she only wrote "by law."

The court will have to interpret the SGLI law's distribution provisions using varying state law definitions of such terms as "widow or widower," "parent," "child," and "other next of kin." As a result, no one - not an attorney or personnel specialist or anyone else - can confidently advise just how a "by law" designation will ultimately distribute these funds. Nor can anyone tell how long the payment of benefits will be delayed due to claims, disputes and litigation brought by a third party seeking inclusion as a "by law" designation beneficiary.

By taking some time to consider and name specific beneficiaries, members avoid these potential problems and exercise the power to control how this benefit is paid.

Although disputes can still occur when a member specifically names beneficiaries, the specifically named beneficiaries will prevail over the unnamed claimants. Court decisions bear out this point, routinely citing specifically named beneficiaries as the best evidence of a military member's intent.

Members must periodically review and update beneficiary designations to ensure they continue to reflect their intentions for the disposition of this benefit. Excellent opportunities to do so include during in- or out-processing as part of a permanent change of station move; as part of regular readiness checks while preparing to deploy and on return from a deployment; when significant events occur in life, such as a marriage, divorce, separation, birth or adoption of a child, or death of a named beneficiary; or at any time a change in beneficiary designations is desired.

An attorney in the base legal office can answer questions and provide advice on this subject. (Courtesy of Air Force Personnel Center)

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