Whether it’s the Air Force, Space Force, Army, Navy or Coast Guard, members of the US armed forces are known for their discipline and preparedness – even when it comes to life insurance. That’s according to a new survey from USAA Life Insurance Company that examines how civilian and military families handle life insurance and end-of-life planning. If you’re considering life insurance, you may want to work with a financial advisor who can help you determine the right amount and type you need to protect your family.
Preparing for the Unknown With Life Insurance
While 84% of military family respondents (from the USAA survey) said they believed their family would be financially secure in the event of their death, only 74% of civilians said they were protected.
“Being prepared is key when it comes to dealing with uncertain financial situations,” said Brandon Carter, president of USAA. “Life insurance can be an uncomfortable subject, but it can make a huge difference for your family in the event of an unexpected death.”
Not surprisingly, active military personnel carry insurance, and most have coverage through Servicemembers’ Group Life Insurance, but many working civilians also get coverage as an employee benefit. Furthermore, nearly 50% of both military and civilians said they also carry private life insurance policies, with about 75% purchasing benefit amounts of $500,000 or less.
Despite that coverage, 40% of civilian families and 27% of military families say they won’t have enough money to cover more than a year’s worth of housing, child care and other basic payments. living expenses if the family’s main financial provider dies.
Military Families’ Opinions on Life Insurance
The survey also provided many other opinions related to general retirement and life insurance. These results from the survey include:
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Inflation: Among military families, 70% say they are concerned that inflation is reducing their retirement spending power and/or their life insurance plan, with 59% of civilians reporting the same concern
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Difficult subjects: One reason many families are unprepared for life insurance is because they are uncomfortable discussing death. However, the USAA survey found that 67% of military respondents and 57% of civilians said they were okay with discussing plans for an unexpected death.
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Cloudy about the cost: One reason for not purchasing life insurance that is almost equally shared among civilians and military families (31% vs 29%) is that they are unclear or how much coverage costs or are concerned about high monthly costs .
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There is no need: Another reason for avoiding life insurance is that some families already have enough other financial resources to not need it, according to 27% of military respondents and 13% of civilian families.
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COVID-19 concerns: The toll and damage of the global pandemic was cited as the main reason for obtaining life insurance coverage by 15% of civilians and 12% of military surveys.
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Personal losses: Of both military and civilian respondents, 15% said they purchased life insurance policies after the recent death of a friend or family member.
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How much do they need?: Generally, insurance experts recommend carrying life insurance with a benefit value that will pay all debts and replace the deceased person’s income for dependents for at least five years. Among military families, 53% said they have enough coverage to cover that goal, compared to 30% of civilians.
How Affordability Affects Life Insurance
As with any investment or purchase, both civilian and military respondents said affordability was cited as a top concern when it came to choosing life insurance coverage. Affordability showed in these key results:
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Close to 70% of respondents said affordability was the top factor in choosing coverage. More than half said they think the average monthly cost of a life insurance policy runs between $25 to $100.
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40% said they rely on the advice and support of life insurance agents to figure out how much coverage they need to carry.
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60% choose coverage based on either the default or standard option, or what will work in the family budget.
No matter how you slice it, the affordability of life insurance has a big impact on who gets covered. More families would probably be covered if it were a little more affordable, but many people can make it fit their budget with the right adjustments.
The Bottom Line
We can learn a lot about sacrifice and preparation from members of our military and their families. Seeing their thoughts and the feedback given on life insurance can give us a good scope to make better life insurance decisions. While affordability will always be high on our list of reasons not to get life insurance, the protection it provides your family may be worth the cost.
Tips for Buying Life Insurance
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There is a lot to consider when buying life insurance. From the type of coverage you need to how much you want your family to receive, it all affects how much you pay and when your family receives benefits. If this is a lot to handle, consider working with a financial advisor who can help you find the right balance for your personal situation. Finding a financial advisor doesn’t have to be difficult. Free SmartAsset tool matches you with up to three financial advisors serving your area, and you can interview your matched advisors free of charge to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goalsstart now.
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It’s not always clear how much life insurance coverage is the right amount to protect your family against the unexpected. You can use SmartAsset’s free calculator to determine how much life insurance might be enough for your situation.
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