Military Life Insurance Guide: How Much, What Type, and Where to Buy ItMilitary members and veterans often have particular life insurance needs. In this guide and accompanying podcast, we explore the many life insurance options accessible to service members and their families.Disclaimer of EndorsementAudio Player: Military Life Insurance: A Guide for Servicemembers
To adjust the volume, press the up or down arrow key.Open the podcast in a new window or download it here.Listen to podcasts via iTunes, Google Podcasts, or RSS.USAA paid for the sponsorship of this item, as required by the FTC. Although this post is sponsored, all opinions are my own.
Annotated Contents Unfortunately, life insurance isn’t the most exciting subject to discuss. It’s a sobering reminder that our time here on Earth is finite. But life insurance is one of the most significant components of our financial toolkit. September is Life Insurance Awareness Month, and today we are providing you with this guide to help you understand more about life insurance, including why you need it, how to determine how much life insurance you need, the basic forms of life insurance, where you can buy life insurance, and much more.
This advice was inspired by a discussion I had with Sean Scaturro, USAA’s Advice Director for Life Insurance. Sean is a certified financial planner and life insurance expert. The podcast that goes along with it features him imparting some of his knowledge.
I decided it would be more helpful to make this written guide instead of just typing down a transcript of our talk, as that wouldn’t allow us to elaborate on particular portions or connect to extra resources when necessary. You can learn a lot about life insurance and how to make sure you have the right coverage from this article and the podcast.
Insuring Your Life: Why You Should Having the potential to make money is the most valuable possession for the vast majority of people. Therefore, it is reasonable to purchase life insurance to safeguard your loved ones. Life insurance, at its essence, is there to help out financially in times of crisis. If something were to happen to you financially, life insurance would be there to help cover your final expenses, any debts or liabilities you may have, and to maintain your current way of living as best as possible.
Thus, life insurance allows you or your loved ones to carry on with their lives without monetary concerns.
Just how much life insurance protection do you really require?The need for life insurance is universal, but the amount and type of coverage that each person needs will vary. Some people recommend saving 5-10 times their annual income.But that may or may not be enough, depending on your net worth, outstanding liabilities, estimated living expenses, and your survivors’ future requirements.
USAA suggests you estimate your life insurance needs by using the acronym LIFE rather than searching for a universal method. Replacement of Expendable Income and Indebtedness How much life insurance should you get to cover your final expenses? By using the information provided by this acronym, you can rapidly determine your individual life insurance requirements based on hard data rather than a general rule of thumb. Let’s delve a little more into each of these.
Liabilities All of your current debts need to be covered by your current liabilities. Money for your mortgage, car payments, student loans, credit card debt, personal loans, and other consumer loans should be included in this total. Having the cash to become debt-free provides the survivors with a new lease on life and will help them go forward without having to worry about crushing debt at a time when they should be thinking about putting their lives back together..
Income Substitution reimbursement of a significant portion of the insured’s income, usually over a period of five years or more. In this way, the family can keep living comfortably without having to quickly find a way to replace the deceased breadwinner’s income. It’s important to remember that not everyone who helps the bottom line gets paid for it. A housewife or househusband might take care of the kids and the house and provide financial and emotional support in various ways.
Consequently, you’re interested in purchasing insurance for that individual. To recap, what are the potential unforeseen costs if one of the partners dies? Closing CostsThe cost of funeral and burial arrangements can be crippling. A person’s financial security is vulnerable to the high costs of long-term care and other forms of intensive medical treatment. Burial or funeral costs are another potential ultimate expense. It’s important to factor in the possibility of these expenses when calculating how much life insurance you need.
Each household has unique educational requirements. Many people immediately think of the cost of higher education. For younger children, this could mean day care or preschool; for older kids, this could mean after-school care or private school if you currently send them there. Think about the things you’d need again if you were to handle everything on your own.
How much life insurance you need is something you can learn more about here.
Should you insure a spouse who does not work?In general, this is a smart plan, as we alluded to before. It’s true that my wife lends a hand with my side hustle, but she’s far more instrumental in keeping the home fires burning. That’s why we covered her with a life insurance policy. In the event of a catastrophe, we may use those savings to help pay for costs we otherwise wouldn’t have. Think about what your partner brings to the table and how the loss of that person can affect your finances.
Should You Get Your Kids Covered? Some people may feel strongly either for or against the idea of insuring their children. It’s not always a good idea to put your kids on your insurance plan, but it’s something to consider. There is a rider I can add to my life insurance policy that will cover my kids for a small additional premium each month (I think it’s only $2 per month). If this happens to be the case, there will be enough money to pay for a funeral and other final expenses. More crucially, many of these riders allow the insurance coverage to be converted once the child enters adulthood. This ensures that they will be uninsurable in the future.
As an investor, I disagree with the idea of obtaining a sizable life insurance policy for a child. Nonetheless, there are valid reasons to invest in even a modest policy for the youngster. The podcast goes into greater depth on the idea of purchasing life insurance for children, so it’s something you should definitely check out.
Varieties of Term Life CoverageFor the sake of this podcast and life insurance guide, we narrowed our focus to the two most frequent types of life insurance offered to military members:
There are two main kinds of life insurance: term (or temporary) and whole (or permanent life insurance). This article expands on the subject of life insurance to cover a wider variety of policies.
To help you decide which type of life insurance is right for you, I will explain the key differences between term and whole life coverage.
Time-Bound Insurance Life insurance policies with a term, or time limit, are known as term life policies. A life insurance policy could cover you for 5, 10, 20, or 30 years, for instance. The policy’s monthly payments won’t change at all throughout the duration of the coverage. Temporary life insurance policies may seem more expensive than permanent policies at first glance, but they can be a better value for many people since they allow them to purchase a higher level of protection for the same or lower outlay. Purchasing a term life insurance policy will help you meet your financial obligations at a time when they are most pressing.
added benefits at reduced costs .Inadequate coverage, no savings component, and a finite policy term are all drawbacks. Lifetime Coverage Policies Unlike term life insurance, a whole life policy does not expire. The cash value of such policies increases with time. On the downside, permanent life insurance typically has higher rates than term life insurance. Instead of stretching your finances too thin, you might acquire a cheaper term life insurance policy to meet your demands at their peak. Because of their long-lasting character, whole life insurance plans can be useful for a variety of purposes, including retirement and estate provision.
Permanent cash value is a major plus.Premiums are too expensive.Term or whole life insurance: which is preferable?That’s a sly way of asking for the wrong answer. It’s not possible to provide everyone with the right answer. Only one option will do for you in this case. You should consider purchasing a term life insurance policy if you have a need that will last for a certain time frame (for example, a growing family, young children, a mortgage, etc.).
This article provides a comprehensive comparison of term life insurance vs. whole life insurance.
Where to Buy a Life Insurance Plan for Military PersonnelThe United States is home to hundreds of life insurance companies. Certainly, there are too many to name here. But we can equip you with the resources you need to make a wise choice. First, we’ll go over SGLI and VGLI, the government-backed group life insurance programs for members of the armed forces and veterans, and then we’ll give you some guidelines for comparing alternative life insurance policies so you can pick one that best suits your needs.
The Group Term Life Insurance Program for Military Personnel (SGLI)Members of the armed forces have access to a low-cost group life insurance scheme called Servicemembers’ Group Life Insurance (SGLI). Members of the Commissioned Corps of the National Oceanic and Atmospheric Administration and the United States Public Health Service are included. Members of the Reserve Officer Training Corps and cadets and midshipmen of the four service academies are also eligible for SGLI coverage.
