Life Insurance Recommendations -- After SGLI

[Boxkicker]

Hey All....

I am soon to be transferring to the Fleet Reserve after 20 years of Navy life. With that, comes non-qualification for SGLI.

What/Who did those of you who either retired from the military or a veteran get for life insurance?

I am divorced, but looking to get married next year, so I will qualify for SBP, if I decide to get that (not sure if I will or not).

I belong to USAA, so that is what I am leaning towards.

Any thoughts/ideas/recommendations from those experienced?

Thanks!

[samclem]

I bought a term policy through Armed Forces Benefit Association about 20 years ago to augment my SGLI (the SGLI limit used to be pretty low, as you probably remember). When I needed to buy some more about 10years ago, I priced several of the "group-rate" term life insurance products available from various associations, etc and ended up going with USAA. Their rates almost exactly the same as the very lowest of the highly-rated issuers, and I trust them to not give my DW a moment of hesitation if she calls them.

As usual, buy only what you need. I got a term policy that will see us through the expenses of daughter's college (if she goes ). You'll probably want to make the SBP decision before you buy a life insurance policy, as you'd need a much bigger policy without SBP to get the same income stream.

When I crunched the numbers (including the effects of inflation) I could not buy life insurance to match the SBP benefit for a lower cost than SBP, so we purchased the SBP. It's a complex decision, and not cheap, but it made sense from several angles for us.

[deepc]

Depends on insurability, cost of Term insurance, married status, your long term outlook.

SBP is expensive at 6+/- pct of your retirement, but if you're uninsurable due to your military career (as I was) then it's an only choice. VGLI costs skyrocket once you're in your fifties, and none of the Term insurance options are really inflation protected. That 500k policy won't look so luxe twenty years from now, where the SBP will keep up with the inflation (though only return 55 pct of your retired pay max).

At typical retirement age, most could get a 1M term policy for about the cost of the SBP (well depending on rank). You got to figure how much you need, how long you think you'll live, and all the other factors (like SBP is taken out before taxes, giving you a benefit there, the inflation protection, the guaranteed cost (in pctage) over time).

Can tell you having retired fm the service a year ago, there isn't a right answer.

[Boxkicker]

Thanks to you both!!!

Gives me good ideas to look at!

[samclem]

Here's a link to an SBP discussion we had here a while back.
Good luck--and hope you never need any of this stuff!

[Gardnr]

I analyzed the SBP decision every which way I could over a long time before deciding to opt for max coverage (i.e. 55%). It does appear to be expensive but when you consider the inflation protection and the permanent nature of it, I don't think you can touch it with life insurance. The final clincher for me was that USAA says they recommend you get it. It's a pretty powerful statement when an insurance provider says that, against their own interests.

That's my take on SBP.

As for the life insurance question I got a 30 yr term for 500K (shopped thru Insure.com, I believe) when I was 40. That augmented my SGLI and provided what I wanted on top of SBP (and other assets) when I retired.

[OAG]

Personally I would only consider Term Life Insurance to supplement and cover the time you want to cover. However, it could be argued that being single (even soon to be otherwise) you do not need it. SBP is good but I only purchased the bare minimum when I retired because I felt Term was the only way to go. Remember, you will pay for SBP (at what ever level you purchase) for 30 years and age 70 (whichever comes last). Term you can terminate whenever the need goes away (or it expires). IMHO today I would only buy Term from USAA. However, you may also want to look at Armed Forces Services Corporation (www.afsc-usa.com) from who I purchased a small insurance policy (not term) from 29 years ago (when they were only Army oriented) solely for the Survivor's Assistance services provided.

Congratulations and good luck with the "retirement" from the Navy.

[friar1610]

Originally Posted by Gardnr

I analyzed the SBP decision every which way I could over a long time before deciding to opt for max coverage (i.e. 55%). It does appear to be expensive but when you consider the inflation protection and the permanent nature of it, I don't think you can touch it with life insurance. The final clincher for me was that USAA says they recommend you get it. It's a pretty powerful statement when an insurance provider says that, against their own interests.

Navy Mutual Aid Association also recommends taking the full SBP. Whether or not you were a member they used to (and probably still do) a nifty analysis that shows they payout if you die the day after you retire. That notwithstanding, I took a less than full amount of SBP. (Remember, your options are not only the minimum or the maximum; you can take SBP for any amount between the 2 extremes.) At the time I retired, I estimated that my wife would need about $20K from SBP plus the life insurance I had in force at the time (which would be invested conservatively to provide annual income) plus the assets in our portfolio, also invested conservatively. So I took it at a level that would provide the $20K. In the years since I've been retired, COLA adjustments have increased that to about $25K. I no longer have most of the (term) life insurance but our portfolio has grown and SS is now in the picture. I rank the SBP decision as one of the most difficult financial decisions I've ever made.

Originally Posted by Gardnr

for the life insurance question I got a 30 yr term for 500K (shopped thru Insure.com, I believe) when I was 40. That augmented my SGLI and provided what I wanted on top of SBP (and other assets) when I retired.

At the time I retired, I had a health concern which has since resolved itself. However, at that time, I wanted the guaranteed insurability provision of VGLI (where you could convert to a commercial whole life policy after 5 years without evidence of insurability.) I never made that conversion and probably paid more for the VGLI than I needed to, but the picture was not crystal clear at that point, so it was probably worth it for peace of mind.

I also had term insurance through MOAA which I have since dropped since I no longer have a mortgage and portfolio growth plus SS have eliminated the need for insurance.

[chinaco]

Ditto the stick with Term idea.

But, one size does not always fit all.

Consider your long-term life needs. You did not mention your age... But while you are working, Life Insurance is basically used to replace the financial loss (usually your income) for the survivor. Some also use it to pay off the house or reduce debt on the survivor.

Also consider the loss of income on your spouse when you retire. They may have reduced income sources and need the money then.

If you need coverage for longer than 30 years and you cannot find a term policy that guarantees the premium payment for more than 30 years... You might want to consider getting a term policy that give the the option to convert to to whole life or UL. Or just purchasing a Whole life policy.

The answer somewhat depends on the assets you already have accumulated.

Make sure you stick with a high rate company.

[Boxkicker]

Thanks for all the comments and advice!!!!

I will be 40 in November, and will be "retired"/Fleet Reserve from the Navy officially on 31Dec08.

I have no children, and am single (but engaged). My fiance has 3 teenage children.

I don't own a house, nor does she. My only assets are my TSP, which has "some" in it and my future retirement check, which will be a little under $2K per month.

I am in perfect health. Never had any problems with myself. My mother just passed away in January of cancer at 61, so that is a little disconcerning. Tricare will take care of my and my future families health care needs.