When members join the military, they are automatically enrolled in the Servicemen's Group Life Insurance (SGLI) for the maximum amount of coverage and premiums are automatically deducted from their military pay. It is not uncommon for servicemembers to be told that all they need is SGLI, when frequently that would be poor advice. Servicemembers deserve the right to make responsible choices and decisions that their civilian counterparts make.
Every insurance decision should be made only after a thorough budget review, as well as a life insurance needs assessment. The Department of Veterans affairs provides a Life Insurance Needs Calculator on-line. This calculator helps military members to determine the amount of life insurance coverage needed.
To determine the amount of life insurance needed, the calculator takes into account current financial obligations, existing assets, and the income that would be needed to support a surviving family. It also takes into account how long the family needs to be sustained. The calculator is intended as a guide in the process and does not replace the services of a financial or insurance specialist who can fine tune your individual circumstances.
Top 5 reasons military members should consider purchasing permanent cash value life insurance while still in the service
1) Servicemembers Group Life Insurance (SGLI) is not a permanent insurance solution. SGLI terminates 120 days after leaving the service. Many service members, in leaving the military, do not convert to Veterans Group Life Insurance (VGLI) because it can be very expensive and increases in cost over time. For more information, read the article "Beyond SGLI" at Military.com written by Captain Mike McHugh.
2) When purchased at a young age, permanent cash value life insurance premiums will remain low and fixed, and the return on many cash value products is outstanding in comparison to other financial choices.
3) The cash values accumulated from a permanent cash value life insurance policy can be used in helping the transition from military to civilian life.
4) Cash value life insurance provides death protection that will be there for a family if necessary.
5) Disability incurred during service could make purchasing standard insurance at normal rates impossible after leaving the service.