Beware of fraudulent insurance

  • Published
  • By 1st Lt. David Fox
  • 82nd Training Wing Judge Advocate
SHEPPARD AIR FORCE BASE, Texas --  Recently, the legal office received numerous inquiries about life insurance. What is life insurance? What kind of insurance is Servicemembers' Group Life Insurance? What rights do I have when purchasing a life insurance policy?

Life insurance is an agreement between the customer, the policy holder, the insurance company and the insurer. The customer agrees to make periodic payments, called "premiums," to the insurance company. In return, the insurance company pays a set amount to someone the customer designates in the agreement, a "beneficiary," upon their death. There are two primary types of life insurance: term and whole.

Term life insurance is exactly what it's called, a policy for a set amount of time. If the buyer dies within that term, the insurance company pays an amount to the designated beneficiaries. Premium payments are usually lower early-on and gradually increase as the customer gets older.

SGLI is a term life insurance offered to military members. The term is the individual's period of active duty and 120 days after separation or release. At a cost of .065 cents per month per $1,000 worth of coverage, SGLI provides very low-cost coverage compared to other life insurance policies.

Whole life insurance is designed to cover a person's entire life. These policies are usually more expensive because they last longer, however, premiums typically remain constant as the individual ages.

When purchasing life insurance, it is important to know what rights you have under Texas law.

· An insurance agent cannot ask for or take a servicemember's "MyPay" account information to purchase life insurance.
· The agent cannot suggest canceling or replacing a servicemember's SGLI policy, unless it is to take effect after the servicemember separates.
· For E-4s and below with SGLI, the agent must conduct a "needs" assessment prior to offering additional insurance to demonstrate that SGLI is not sufficient for the servicemember's situation.
· If the purchase is made face-to-face and the agent knows the individual is a servicemember, they must give instructions on how to cancel the policy once it is issued.
· The agent must also provide documents clearly stating the type of insurance, the death benefit and the expected first year's cost.

For any questions or fraud concerns, please contact the legal office at 676-4262 to schedule a legal assistance appointment with an attorney.