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AAFMAA Blog

Are You Making the Most of Your AAFMAA Life Insurance Policies?

2020-12-09

You already depend on your AAFMAA life insurance policies to protect your loved ones, but did you know that your policies may provide benefits beyond the standard death settlement? For instance, AAFMAA term and whole life policies contain valuable features that can help ensure your family’s financial security. Learn more below about these benefits and how you can make the most of your AAFMAA policies.

Level Term I:

Alongside the standard death benefit, Level Term I policies include a $10,000 benefit covering your eligible children at no additional cost. 

Level Term I policies also have two conversion options to continue your coverage with AAFMAA at the end of your policy term:

  1. Convert all or some of the current death benefit to a Value-Added Whole Life policy with no additional medical underwriting. This quick and easy process allows you to secure lifetime coverage.
  2.  Convert the policy to a Five-Year Renewable Term policy by age 48 (age 38 for nicotine users) without additional medical underwriting. 

Level Term II:

Level Term II includes a conversion privilege as well, which allows you to convert a portion or all of your current benefit to a Value-Added Whole Life policy within the first five years of the policy without additional medical underwriting. Recent Level Term II plans also have an Annual Renewable Term (ART) option at the end of the Level Term II policy’s primary term to extend your protection term as needed to age 100. 

Money-saving tip: The Five-Year Renewable Term conversion and the ART conversion listed above are best suited to those who have acquired health conditions that now make them uninsurable. If you are healthy, the rates for a fully underwritten policy will likely be less expensive than either conversion option. A consultation with AAFMAA Policy Services can help you make the best choice. 

Value-Added Whole Life:

Value-Added Whole Life policies offer competitive premiums and substantial cash value growth at our industry leading crediting rate. They also contain three additional benefits you may not be aware of:

  1. Loan Value: You can take a loan of up to 75% of the cash value in your policy at a competitive interest rate of just 1% above the current crediting rate. For instance, the crediting rate on Value-Added Whole Life policies is 4.75% for 2021, so the loan rate is 5.75%. Keep in mind, however, that AAFMAA still credits the current crediting rate to your cash value while your loan is outstanding. We also recommend setting up a periodic payment plan and paying the interest every year to avoid it capitalizing to your loan balance.
  2. Paid Up: You can “pay-up” your Value-Added Whole Life policy and never make another premium payment. If you have been paying into your policy for multiple years, call Policy Services to find out how much you need to pay your policy up for good, or choose a shorter payment plan such as 10-, 20-, or 30-year pay. 
  3. Reduced Paid Up: You can choose to reduce your death benefit to a level that would make your policy paid-up at its current level, meaning you’d pay no additional premiums but you’d  maintain coverage for life and still receive AAFMAA’s industry leading crediting rate. Ask an AAFMAA Policy Services representative for more information.

Beneficiaries and Successor Owners

The last two features that benefit Members apply to both term and whole life policies: Beneficiaries and Successor Owners

  1. Beneficiaries: Review your beneficiary information frequently, update according to life changes, and always be prepared. AAFMAA lists your current beneficiary on your annual statement each year, making it easy for you to review and update. This is especially important if you go through significant family changes such as marriage, the birth of a child, or divorce.​

Important note: If you’ve gone through a divorce but still want your former spouse listed to obtain the death benefit, we request that you to update their beneficiary information to “Former Spouse.” This is essential because some states invalidate beneficiaries listed as “Spouse” if there has been a divorce. 

  1. Successor Owner: If you own a policy insuring someone else, be sure you have a Successor Owner form on record. This allows AAFMAA to immediately transfer the ownership of a policy to your successor owner in the event of your unexpected passing. This will keep the policy from getting tied to an estate and save your survivor(s) time in having the policy ownership transferred. 

If you have any questions on these topics, please contact AAFMAA Policy Services at 800-336-4538, Monday through Friday, 8:30 a.m.-5:30 p.m. ET.