Veterans can receive many advantages through the Department of Veterans Affairs (VA) , including service-connected disability compensation, medical care, education programs, and more. But despite these great advantages, it’s important to recognize that VA benefits don’t always support all your or your family’s financial needs. For instance, while VA disability compensation provides important tax-free income for service-connected conditions, it often doesn't account for broader financial responsibilities such as mortgage payments, college tuition, or long-term care. To cover these gaps, consider investing in a life insurance policy that will help protect your family’s future financial well-being.
VA Disability vs. Life Insurance
VA disability offers benefits that can only be used while a Veteran is living; the benefit ends when the Veteran passes away. If a Veteran passes from a service-connected condition, only then will there be any stipend for the family, and it’s often not enough to cover their survivors’ needs. Life insurance, on the other hand, can help bridge this financial gap through a death benefit that can support surviving family members, settle outstanding debts, or maintain a standard of living.
While many people understand that having life insurance can benefit their family, few know exactly how their coverage needs may change over time.
Types of Life Insurance
Life insurance is offered in two primary categories: term and whole life. Term life insurance covers a specific period of time and typically comes with lower premiums; however, it eventually expires and does not build cash value. In contrast, whole life insurance offers lifelong coverage and while it has higher premiums, it accumulates cash value over time — so, buying whole life insurance while you’re younger, healthier and still serving, holding onto it, and continuing the coverage after leaving the service can be an affordable financial protection strategy.
When to Buy Life Insurance
Whether you choose term or whole life insurance, in order to lock in lower premiums, it’s best to purchase your policy when you’re young and healthy — and before the physical effects of military service set in, since rates increase with age and the development of health conditions, including VA disability claims.
Choosing Term Life Protection
If you’re younger and serving on active duty, term life insurance is a good option, since it has a lower premium compared to whole life. For example, if you’re a 25-year-old healthy male, an $800,000, 20-year term life insurance policy with Armed Forces Mutual could have a monthly premium as low as $39.00. By comparison, the same policy issued at age 45 after leaving service could require a monthly premium of $92.60.
Additionally, a term life policy may offer a more affordable, higher coverage amount that will help cover everyday life expenses, from mortgage payments to education costs for your children.
Servicemembers Group Life Insurance (SGLI) is an example of term life insurance, but coverage is limited to a maximum of $500,000 and ends 120 days after you separate from the military. A smart financial strategy would be to purchase a commercial term life policy of up to $800,000 in coverage in addition to your SGLI coverage while you’re in service. That way, you’ll know you’re protected for whatever SGLI isn’t able to cover and may continue even after you leave service.
Choosing Whole Life Protection
Once you’re married or planning a family, it’s a good time to assess your life insurance coverage needs to ensure all of you are adequately covered for the years ahead. A whole life insurance policy purchased when you’re young and healthy ensures that your survivors are set up with income after you pass away and can provide financial security to cover funeral expenses not paid by VA survivor benefits.
A whole life insurance policy is permanent and will not expire, but again, your premium will remain low if you purchase it when you’re young and healthy. The cash value that accrues over the life of the policy can increase the death benefit received by survivors. You also have the option to borrow against the value of the policy, if needed — and some Armed Forces Mutual policies provide a Long-Term Care Settlement Option as an added, alternative benefit. This option would be helpful if a nursing home or skilled nursing care is needed later in life, which can be very expensive if paid for out-of-pocket. Since Medicare does not cover nursing home care and Veterans benefits are determined case-by-case, a commercial whole life insurance policy may help fill this need.
Protect Your Family and Your Peace of Mind
As a Veteran, when you consider the gaps that can be left by VA disability benefits, it’s also important to think ahead so you’ll be better prepared for anything that military life and your retirement years throw your way. You may even find that a combination of term and whole life policies will not only ensure your financial security and stability but provide additional financial gain over the years.
Get a quote now to find a policy for you or contact a Membership Coordinator at 800-522-5221 to discuss your life insurance options.