Whether you’re a veteran that just retired and are now losing your SGLI or you’ve been out of the service for many years and your VGLI is rising in cost, looking at a commercial life insurance policy is a great way to ensure your family is taken care of the day you pass away. This article reviews three different potential situations, all I have commonly come across, while analyzing the most common policies best suited for each situation.
Early Age Veteran
This veteran is the one that spent 4-10 years in the service, then left the service in search of a new and different career. Typically, these veterans range from 25-40. Since they are still very young, most of them are still relatively healthy. If you fit in this category, then the best policy for you is going to be a term or Indexed Universal Life, IUL, policy. It’s important to speak with an advisor to determine what assets you want to protect, i.e. a mortgage or home, and determine what the protection is needed for, in order to determine the best kind of coverage. If you have a mortgage, in this case I would recommend doing a mortgage protection policy. For more information on what mortgage protection policies are, click here. However, if you’re looking for a more permanent policy I would recommend one with invested cash value, or an IUL. Each of these policies have their own purpose and one is not better than the other. It all depends on what your goals and needs are. This is why I always recommend speaking with an advisor and do a thorough financial inventory.
Retirement Age Veteran
This veteran spent somewhere between 20 and 30 years in the service. They are anywhere between 38-50 years old. Nearly all retirees buy a house or already own one when they leave the service. One consideration all advisors take in account is the age of the client. This affects lengths of term, price of policies, most likely health conditions, etc. One option would be to do a mortgage protection term that returns all of your cash back at the end of the term if the policy isn’t enacted. Another option is to get a mortgage protection term that converts to a whole life policy once the term ends if the policy isn’t enacted or utilized, also called a continuation policy. My reasoning for recommending two different mortgage protection terms is because they also come with living benefits that pay out to the insured if certain medical diagnoses take place. To find out more about living benefit riders click here. Additionally, it’s important at this age to get some kind of lasting value from the policy if it isn’t used. This is the timeframe when terms are still affordable, however they are starting to rise in cost.
To give you an understanding of the value a cash back policy can have lets go over a potential situation. Let’s take for example, you are 40 years old and get a 30 year term for $300,000, you will pay approximately $95-$110 a month, depending on the carrier and type of policy. If you live the next 30 years and don’t use the policy that means you spent $39,600 on the higher end and all that money is now gone. Now, if you had the chance to get your money back but you had to pay approximately $175 and you got back $63,000 cash back to you if you didn’t use the policy, that would be worth it, right? I always recommend to pay the extra money and get more value out of your policy, just in case you outlive the policy. It creates a policy that’s a sure bet, and besides then you will be able to say you have an insurance bill that will pay you back everything!
Elderly Age Veteran
This veteran is the Vietnam era and older veteran. Early 60’s to 80’s. What I have found is this client typically is just looking to ensure their burial is completely paid for and maybe leave some money behind. If they have, or have had, VGLI they understand the value in getting a level policy that has premiums locked in from day one and do not rise, (to find out more about how VGLI works, click here). If you can identify with this type of veteran, then the best policy going forward is very clear. Look at whole life policies focusing on final expense/burial coverage amounts. You also want to make sure the policy is level-level. That means it is level in two ways. First way it is level is your payments are locked in and never change. The second way it is level is the policy pays out to your beneficiary, in full, on day one. There is no waiting period. The best kind of policy is the one that pays out, and if for some reason you pass away right after starting the policy, you want to make sure that your family is protected. I will also caveat, the only way the policy will pay out is if you were completely honest on your application and there are no pre-existing conditions that might prohibit the company from approving the payout. It’s important to go over these factors with your advisor when you speak with them.
If you are denied for level coverage, don’t fret. Click here for an article on steps to take when you’re denied to keep looking for the best coverage. Ultimately, understand that all insurance carriers have different underwriting and approval standards. For instance if you are a diabetic that takes insulin and have since the age of 40, American Amicable and Mutual of Omaha would not give you a level coverage, but Americo and Foresters would. It’s these small nuances that your advisor should understand when picking the best policy for you and submitting an application on your behalf.
So, What’s the Best Type of Life Insurance Policy?As we would say in the military when a senior officer asked a question that the answer ultimately was “it depends”, well its METT-TC dependent. It depends on your age, your financial situation, the assets you’re trying to protect, and what you want your coverage to do for you. The three situations above are just the three variations I have encountered most in my career, but they are by no means an exhaustive list. Ultimately, if you are a veteran and in the market for life insurance protection for you and your family, its best to speak with an advisor that can help guide you through the different types of policies and show you what’s out there. As a veteran myself, I specialize in helping veterans find the best policy, because I understand where you are coming from and what your concerns are when leaving the military. If you want to schedule a session, you can email me at [email protected] or text me at (931) 249-7363. Also, take time to look at some of the other articles and videos I have published for you, and use the final expense quoting tool here, or the life insurance quoting tool here if you want to see what your prices may be. Until next time!