On the last Monday in May of each year, Memorial Day honors American military personnel who gave their lives for their country, and because a member of the armed forces can be deployed at a moment’s notice, securing his or her family’s financial future can be an added challenge.
“People in the military are eligible for life insurance like others,” said Brian Ashe, spokesperson for the Life Foundation. “But if they are going to a hot zone like Afghanistan, they could be refused insurance or have limited private coverage.”
Ashe adds that it all depends on what happens at the time they applied for insurance. For example, if a member of the military applies for commercial life insurance, is accepted, and in six months they are sent to a combat zone their policy will cover them overseas—regardless of their location.
If a member of the military applies for life insurance and they are being sent to a combat zone the next day or are already there, the insurer will hold off writing a policy until they return to a base elsewhere or return home. Ashe says life insurance companies often follow guidelines when writing a policy that takes location, rank and pay scale into consideration. The insurance company then decides whether they will accept a policy or decline and what rate they will charge for insurance.
If a family is just starting out, insurance experts recommend purchasing a term life policy. The reasons are because of its low cost and flexibility.
For example, a healthy, 30-year-old male can purchase a 250,000 dollar, 10-year term life insurance policy for 115 dollars a year. A healthy female can get the same coverage for 104 dollars a year.
Men and women in their thirties who are in good health and do not smoke can purchase a one million dollar, 10-year term life insurance policy for an annual premium of 250 to 260 dollars.
“The most important thing is your health,” said Ashe. “You can have money but a company won’t sell you life insurance if you’re not healthy. People are healthier when they are young and rates are lower.”
Rates for term life are much lower than other types of life insurance and policyholders always have the option to renew the policy once the “term” ends. The term is typically 10, 20 or 30 years. Once their needs change they may find that a permanent or whole life insurance plan is the better choice for their family. Whole life provides coverage for a lifetime and offers a cash value component that can be used to save money for a child’s tuition, pay off a mortgage or plan for retirement.
Private Military Term Life
There are a number of options available from the U.S. military, in addition to specialized life insurance plans from commercial insurers that cater to military service members. Most commercial life insurance companies offer Private Military Term Life coverage for members of the armed services who want to supplement their life insurance coverage provided by the Department of Veterans Affairs (VA).
For instance, Prudential will write a policy at a standard rate for a military member deployed to a combat zone as long as they pass a paramedical examination. The advantages of Private Military Term Life include:
- Accelerated review: in order to ensure the military service member is covered, insurance insurers will expedite the applications review process.
- Additional insurance protection: if the amount of SGLI coverage is not enough, insurance insurers offer supplementary term life coverage to make up the difference.
- No war exclusions: private military coverage always pays benefits to beneficiaries if the policyholder should die of war-related injuries, regardless of their location.
- Disability and severe injury benefits: private military term life often provides disability coverage up to a certain amount, if the policyholder is injured in the line of duty.
The Government Option
The U.S. government provides affordable group term life insurance through the Servicemembers’ Group Life Insurance (SGLI), U.S. Department of Veterans Affairs. Life insurance insurers USAA and USBA, which is underwritten by New York Life, offer these customized plans.
According to the VA, SGLI premiums are .065 per 1,000 dollars of insurance. They also offer coverage ranging from 50,000 to 400,000 dollars.
Members of the Armed Forces are automatically signed up for coverage when they join the military, but they can choose to “opt out” of being enrolled in an SGLI life insurance plan. SGLI plans also offer “no cost” disability coverage for up to two years.
Another form of life insurance offered by the military is Veterans Group Life Insurance (VGLI), which is life insurance offered to members of the military after they leave the service. However, Life insurance provided by both SGLI and VGLI are limited to term life policies.
“If they (military personnel) can’t afford everything they want right now, they can get a guaranteed insurability option,” said Ashe. “That means regardless of their future health, they would have the right to buy more insurance.”
Experts also recommend shopping around. Research each company to determine which insurer can provide the best deal. Some private insurers are more attuned to the needs of armed services members.
“Many policies allow riders for spouses and children,” said Ashe. “So military personnel can add a spouse or child to their coverage and typically those riders allow the spouse or child to convert to a permanent life insurance plan at some point.”
Although U.S. deployment overseas continues, affordable life insurance options can ease the financial stress felt by the families of those who bravely serve.