How to Pay for Life Insurance from your Military Allotments

Life insurance is one of the primary things that we require for a family or an individual on whom others depend. It is even more significant if you are the sole earning member of your family. How will your family members manage their finances once you are gone? Life insurance gives you an option to provide for your family members to see that they are well-provided for through your military benefits once you have passed on.

For civilians, paying for life insurance is usually done by either the individual or their employer. However, if a person works for the armed forces, then the system of paying for life insurance is usually done through a military allotment. In this article, we take a closer look at military allotments, how they work, and the terms and conditions that apply to them.We also consider whether an allotment is required to buy insurance for a military person.

What is a Military Allotment?

A military allotment also known as military pay is an amount of money that gets paid automatically to an army person which is deducted from their pay. The reason for an allotment maybe for payment of a military loan to provide for the person’s family expenses or auto pay for insurance premiums.

Amendments to Military Allotments

Chuck HagelSecretary of Defense sometime back ordered for the bill following an interagency review due to a significant enforcement action by the Consumer Financial Protection Bureau(CFPB). The change will become part of the Department of DefenseFinancial Management Regulation and will be only applicable to those in active service and not for those who have retired or civilians employed by the Department of Defense. It also doesn’t have any bearing on existing allotments which are being made to savings accounts, to support dependence, payment of rent, investments, mortgages or military life insurance premiums.

Military Allotments Explained

As mentioned all allotmentsare military benefits that get allocated out automatically from your pay and can be either discretionary or non-discretionary. According to allotment eligibility criteria, you are allowed to have a maximum of six discretionary allotments in a single month and the total number of non-discretionary allotments per month can be up to 15.

You will receive your military pay through your semimonthly paychecks. Hence our military allotment of $100 will only reduce your military pay by $50 for the period between the 1st and 15th of the month.

Although service people in active service status receive military pay, retirees can continue with existing allotments.

Discretionary allotments

This category of allotment is voluntary and can be set up by the member and stopped started or adjusted at their discretion. The member can have no more than six discretionary allotments in a single month.

Here are a few examples of discretionary allotments:

Payment of premiums for commercial life insurance from military allotments on the member, the member’s spouse or children to be paid to US Government Life Insurance, National Life National Service Life Insurance,Commercial Insurance and Navy Mutual Aid
Voluntary payment to add dependents or other relatives
Deposits to a financial institution, a mutual fund company or investment firm.
Payment of mortgage or rent
Deposit into the Department of DefenseSavings Deposit Program
Payments to the Air Force Enlisted Members Windows Home for Air Force members only.

Non-discretionary allotments

Purchase of US savings bonds
Relief repayments
Government indebtedness
Charity
Assistance funds
Child and spousal support
Debts for non-discretionary allotments

Restrictions on Military Allotments

There are some eligibility criteria for making military allotments for paying life insurance. Here are some of the exceptions where a military allotment is not permitted:

Minors– Children under 16 cannot receive allotments (except bonds).
Mentally Incompetent Persons– A guardian or institution will need to be nominated to receive an allotment on behalf of a mentally incompetent person.
Power of Attorney – A general power of attorney cannotamendor prevent an allotment. The individual who is vested with a general power of attorney needs to be authorized in writing by the individual in whose name the allotment gets paid.
Member Awaiting Trial by Court-Martial– Members are prohibited from registering allotments from the start date of a court-martial until the date of the delivery or disapproval of the sentence. Standing allotments will be stopped when it is necessary to allow for the collection of the forfeiture ofthe amount that is paid every month specified and the time limitation mentioned by the court-martial, or if the sentence states that the individual forfeit all benefits including pay and allowances. Prisoners can register allotment, under certain conditions, but stringent rules are governing this.
Returned Absentee, Deserter, and Prisoner– Allotments are not allowed for an absentee who has returned or a deserter unless the DFAS has confirmed specific verification of the individual’s pay status.
Fraudulent Enlistment– An individual is not eligible for an allotment in cases where there is a suspension of pay is due to final action on conclusive evidence of fraudulent enlistment.
Reduced Pay of Allotter– Allotments are stopped if a grade has been reduced or pay has been stopped for a particular reason, and sufficient funds aren’t available to cover the existing allotments.

Permitted Allotments

Amendments to the DoD FMR would update the list on the types of allotments that are permitted, to include but not limited to, allotments for payments for or to, or deposits to:

Savings accounts
Support to dependents or other relatives, spouse or former spouse
Relatives not legally designated as dependent
Military Life Insurance premiums
Mortgage or rent paid on towards immoveable property
The Air Force Enlisted Village (solely for Airforce personnel)
A financial company, mutual fund agency, or investment company, U.S. Savings Bonds (throughthe Treasury Direct Account)
Debts owed for finance administered by the U.S. Government
Charitable contributions to the Combined Federal Campaign
Military privatized housing payments.

Prohibited Allotments

Changes to the DoD FMR would update the list of the allotments that are not permitted, including allotments to buy or finance:

Vehicles (e.g., cars, motorbikes, boats)
Appliances or household items (e.g., washing machines, dryers or furniture)
Electronic goods (e.g., laptops, tablets, mobile phones, TVs) or
Other consumer articles that are tangible and movable.

Amendments to Insurance Allotments

Sometimes you may observe that there is a change to the amount of your military allotment for paying your military life insurance. Here are some of the scenarios and what you need to do under such circumstances:

In case you need to change your military life insurance premium amount, your insurance provider cannot do it. Get in touch with the Defense Financeand Accounting Service (DFAS)by calling 800-321-1080 who will take care of your military benefits by changing the amount of your allotment deduction.
In case of Tricare and Long-Term Care insurance allotments, your insurer will be able to make the necessary changes, so you should contact them with your request.
If you received a Retiree Account Statement (RAS) where a net pay change is reflected, you should contact your insurance provider, who will be able to advise if you need to get your insurance amount amended.
In case of payment more than the insurance amount required, your insurance provider will transfer the overpaid amount back to DFAS who will in turn credit it into your retirement pay account.
The DFAS will inform you of payment returns, but such transactions will not show in the RAS.

These are just a few interesting points about military allotments, military benefits and how you can use them to pay for your military life insurance. You will now have a better idea how these military allotments work and the basis of acceptance or rejection of these allotments.

Hence, the question “Do I need military allotments to buy life insurance?” also presents an answer. It isn’t mandatory to set up a military allotment to buy life insurance, but the provision exists, and if you do, it is a convenient arrangement for hassle-free payments of life insurance premiums.

Once you understand the basis of your allotment eligibility, you can set up an appropriate allotment to buy your life insurance and have the premiums paid and up-to-date so that you can look after your family members in the case of the unforeseen.