Servicemembers' and Veterans' Group - Life Insurance Handbook
6.01 DESIGNATIONS OF BENEFICIARY(IES) - GENERAL
6.02 PREPARATION OF SGLV 8286
6.03 UNCLEAR OR UNUSUAL BENEFICIARY DESIGNATIONS
6.04 DESIGNATIONS OF BENEFICIARIES WHO ARE MINORS
6.05 DESIGNATION CHANGE OR CANCELLATION
6.06 BENEFICIARY(IES) NOT DESIGNATED
6.07 AUTOMATIC TERMINATION OF BENEFICIARY DESIGNATION
Any insured under SGLI may designate as principal beneficiary or contingent beneficiary any person, firm, corporation or legal entity (including the insured's estate), individually or as a trustee.
a. Members covered under SGLI should complete SGLV Form 8286 whenever they make a beneficiary designation or change a previous designation.
b. The following are guidelines to be used in the preparation of the form:
(1) Members should be encouraged to name a specific beneficiary.
(2) If a member does not want to designate a specific beneficiary but prefers the proceeds to be paid in the order of precedence, the member should enter "By Law" in the appropriate space on the form.
(3) When designating a married woman as beneficiary, her own first and middle names, and her husband's last name should be shown.
(4) If a member designates more than one beneficiary, the member should specify in fractions, percentages, or monetary amounts the share to be paid to each; otherwise, they will share equally in the proceeds. A member may also designate a contingent beneficiary on form SGLV 8286. In making such a designation, the member must clearly identify each beneficiary as the principal or contingent, with the principal beneficiary always listed first. NOTE: A contingent beneficiary is a person or persons designated to receive the insurance proceeds if the principal beneficiaries die before the insured dies.
c. When completed and dated, the form SGLV 8286 must be submitted to the member's uniformed service because a beneficiary designation is not effective until it is received by the uniformed service. The uniformed service should immediately date and certify it as received. It should promptly be placed in the member's personnel file. Only the latest beneficiary designation in the member's personnel file will be considered valid.
d. SGLI and VGLI are federal programs and operate under federal law. Under federal law, the insured has the absolute right to name and change the beneficiary at any time. State divorce decrees, separation agreements or other state or municipal court documents are not binding on the determination of a beneficiary and cannot effectively change an insured's beneficiary designation.
NOTE: Do not forward SGLV 8286 to any VA office or the OSGLI.
a. There are many instances when the member should clearly designate a specific beneficiary or beneficiaries to ensure that the proceeds are distributed to the persons or persons whom the insured intended to be the beneficiary(ies). Some examples are:
(1) When a member has a parent who has remarried but both natural parents are living; or
(2) When a member is divorced and remarried, but has children living with the first spouse; or
(3) When a member has no immediate next of kin and wants a distant relative or friend to receive the proceeds.
b. When a member is likely to be survived by dependents or parents and designates some other person or entity as beneficiary, a responsible representative of the uniformed service should advise the member to submit a signed memorandum indicating that the member understands the designation is unusual and that the person named by the member as the beneficiary is the person he or she intends to receive the proceeds.
c. Whenever there is any question or doubt as to a beneficiary, the uniformed service should encourage the member to complete SGLV Form 8286, Servicemembers' Group Life Insurance Election and Certificate, in order to clearly identify the person(s) to whom the proceeds of the insurance should be paid.
d. While the selection of a beneficiary is a matter of free election for the insured and the insured should never be forced to designate otherwise, under Public Law 109-13 if a Servicemember is married the Department of Defense must provide written notification to their spouse of a change of designation. Even with this provision the member should choose to name any beneficiary he/she desires. However, if disregarding dependents or parents in designating beneficiaries, it is desirable that the member documents their intent on the designation form.
a. The law allows payment of SGLI to be made directly to a minor surviving spouse.
b. If the beneficiary is a child, the insurance proceeds will be paid to the child's guardian.
c. The appointment of a guardian is often time consuming and costly and, for that reason, may delay the payment of proceeds. The amount of the proceeds can be materially reduced by the payment of court costs, attorney fees and expenses incurred by the guardian. To avoid such complications and expense, a member may choose to consult with an attorney to designate a pre-appointed trustee of the minor beneficiary.
a. An insured member may, at any time, change or cancel a previous designation.
b. If a married member designates as beneficiary someone other than a spouse or child, the spouse will be notified that a change has occurred, except in the following circumstances:
(1) the spouse has been previously notified of the change in beneficiary; and
(2) the spouse was not a beneficiary in the election prior to the current beneficiary change
The member's spouse will be notified by the Department of Defense of any such election at the last address of record of the spouse. The failure to notify a spouse of the election not to be insured does not affect the validity of the election.
Example 1: Married member names his mother the sole beneficiary of his SGLI policy. The member's spouse will be notified of the election.
The married member subsequently changes the beneficiary on his policy to his brother. The member's spouse will not be notified of the election.
c. The following rules apply when the law governing SGLI is amended to increase the amount of insurance coverage:
- An insured should submit a new beneficiary designation.
- If an insured was covered for the maximum amount under a prior law, the prior beneficiary designation and payment option filed by the member will be effective until changed and the proceeds will be distributed in the same proportionate amount as the portion designated for such beneficiary under the prior law.
Coverage Designation Amount Paid $250,000
d. A beneficiary designation will remain in effect until properly changed by the member or automatically canceled. (See paragraph 6.07). Termination of one period of duty and reentry into another period of duty will not automatically cancel the designation unless there is a break in service. (See paragraph 1.02(i)) for definition of break in service.)
e. A designation change or cancellation will take effect only if it is in writing, signed by the insured and received prior to the date of death of the insured by the uniformed service.
f. If such designation change or cancellation is made during a period of extended coverage following separation or release, such change will take effect only if received by the OSGLI prior to the insured's death.
Members should be encouraged to name a specific beneficiary. If a member does not designate a beneficiary, the insurance will automatically be paid in the following order of precedence:
a. The surviving spouse of the member; if none,
b. The child or children of the member, in equal shares, with the share of any deceased children to be distributed among the descendants of that child; if none,
c. The parents in equal shares or all to the surviving parent; if none,
d. A duly appointed executor or administrator of the insured's estate; if none,
e. Other next of kin.
NOTE: An insured's biological parents are not always who the individual intended to receive the proceeds, and in cases such as abandonment, they are not recognized as legal parents. Claim disputes involving the recognition of "rightful" parents can be avoided by discouraging the use of "By Law" designations and listing the parents by name.
A designation of beneficiary made by a member insured under SGLI for full-time or part-time coverage will automatically be canceled under the following rules:
a. When the insurance terminates following separation or release from all duty or the obligation to perform duty in a uniformed service;
b. When the member re-enters on duty or assumes an obligation to perform duty in another uniformed service; or
c. When the member reenters on duty in the same uniformed service more than one calendar day after separation or release from all duty in that uniformed service. NOTE: If a prior designation is terminated for any of the reasons shown above and the member wants the insurance proceeds paid to a designated beneficiary, a completed new form SGLV 8286 must be submitted to the member's uniformed service.