One area of finance that is oft overlooked is insurance. While on active duty status, most people choose a $400,000 SGLI benefit that insures that if something were to happen, their family would be taken care of. At $0.06 per $1,000, SGLI is relatively inexpensive given the risk that’s being insured. But what about insurance when you ETS or retire?
One option is VGLI, which you can see based on the table below gets very expensive as you get older.
If you’re looking for other options, commercial policies exist that may be more affordable for you and your family.
Life insurance can generally be broken down into two different categories: Term and Whole life.
Term life insurance covers a period of years… generally broken down into 10, 20, and 30 year periods. Term policies are usually less expensive than whole life insurance depending on the time period being covered and factors such as age, health etc. With a term policy, the death benefit only pays out if you pass away during the period covered.
Whole life insurance covers you for the rest of your life and is usually more expensive. A whole life policy costs the same amount every month and the death benefit is guaranteed. The cash value grows at a guaranteed rate and with most policies, you can sell your insurance at a certain time period (basically cashing out of the policy). Some policies pay dividends as well.
So why is it important to consider insurance prior to ETSing or retiring?
As you can see from the chart above, VGLI might not be the best option. When considering a commercial policy, one of the factors insurance companies consider when determining rates is health. Many people claim VA disability when they ETS or retire from the military. If you are looking to insure that your family will be taken care of after departing from the military, you should STRONGLY CONSIDER looking at insurance policies prior to getting examined for VA disability.
If your medical records suggest that you suffer from PTSD, sleep apnea, or other ailments based on a VA disability claim, your insurance rates will go up significantly. If you’re looking to remain insured after a PCS or ETS and want to save money doing so, take a look at whole life and term policies before you claim VA disability. Doing so could save you a significant amount of money in the long run. $
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