5 Types of Life Insurance for Military Members and Families
There are 5 basic types of life insurance to choose from, which we will explore below. Which one is right for you depends greatly on your financial needs, plans, and goals for the policy if and when it’s needed.
There are two primary kinds of life insurance: term life insurance and permanent life insurance. Three additional categories of life insurance fall under the “permanent” category.
If you’re looking for additional life insurance coverage, whether retired, separated, active duty, Guard, or Reserve, be prepared to shop around. Military-friendly companies, including Navy Mutual, offer life insurance options created to address the unique needs of military families.
If you haven’t reviewed your coverage in a while, it pays to compare today’s options to your current life insurance policy.
Differences Between Term Life Insurance and Permanent Life Insurance
The fundamental difference between these two options is that term life is more affordable but only covers you for a specified number of years (as long as you stay current on the payments) before renewing (often year-to-year) or dropping the coverage.
Your rate for the plan may be adjusted once the term has expired due to age and health. Some may be able to convert a term life policy to a whole life insurance option when the term expires. Check the fine print of your policy to learn if this option is available.
Permanent life insurance applies as long as you keep making the payments. There is no term to expire.
Is SGLI Term Life Insurance or Permanent Life Insurance?
Servicemembers Group Life Insurance, Veterans Group Life Insurance, and Family Group Life Insurance are all examples of term life insurance programs offered when you join the military.
Read more: SGLI Pros and Cons
How Permanent Life Insurance Differs From Term Life Insurance
Permanent life insurance, such as whole life insurance, offers coverage for your entire lifetime, as the name implies. You must stay current on your payments to continue coverage, but this type of insurance includes a fixed interest rate paid on your insurance policy that creates a cash value over time.
The cash value does not change the death benefit amount, but you will reach a point with the policy (over time) where you can apply for a life insurance loan on that cash value.
If you hold the insurance long enough that the cash value grows to equal the death benefit payout, your insurer may cancel the policy and pay you the amount in cash.
Other Types of Life Insurance
The following three types of life insurance all fall under the “permanent” category.
- Universal life insurance
- Variable life insurance
- Final expense life insurance
Universal Life Insurance
Universal life insurance is another option for coverage for your entire life as long as you continue to make payments.
This option could be marketed to you as “adjustable life insurance” because, depending on the terms of your contract, you may be allowed to change the amount of your death benefit and skip payments. You may earn interest on your policy over time.
This type of life insurance earning isn’t quite the same as whole life insurance–the universal life insurance rate has a minimum but may be adjustable up or down over time. Your interest rate earnings could build up to the point where you have a no-cost insurance policy that remains active without requiring you to make further payments.
Your experience will vary depending on the service provider; don’t assume the terms and conditions of one policy are identical to others.
Variable Life Insurance
Some sources describe variable life insurance as “a riskier type” of permanent life insurance.
Why? Because you agree to invest some of your life insurance funds in exchange for a policy designed to pay out more if your investment choices are profitable.
However, the investments associated with the policy are not guaranteed, resulting in elevated risk. Some may lose some of their investment funds, while others may profit.
You may not be right for variable life insurance if you don’t feel you know what you’re doing where investments are concerned or aren’t interested in paying closer attention to this type of policy than you would for a term life insurance option.
Funeral Insurance / Final Expense Insurance
This variation of whole-life insurance offers more affordable coverage to offset end-of-life costs associated with funerals, medical bills, or debt.
This type of life insurance may have fewer or no age or health criteria, making it easier for older people to apply for coverage. However, it may not meet more extensive needs often covered by term or whole life insurance.
>> Get affordable life insurance coverage without a medical exam or labs. Contact us for a no-obligation, free consultation to determine your eligibility.
About the author
Editor-in-Chief Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter/editor for Air Force Television News and the Pentagon Channel. His freelance work includes contract work for Motorola, VALoans.com, and Credit Karma. He is co-founder of Dim Art House in Springfield, Illinois, and spends his non-writing time as an abstract painter, independent publisher, and occasional filmmaker.
