Supporting the Relocation, Travel, and Lifestyle Needs of the American Military Family

Planning to leave the military? It's a good idea to start shopping for life insurance at least two months before your anticipated separation date. Your Servicemembers' Group Life Insurance (SGLI) policy won't cover you once you leave the military. Since it can take up to six weeks to get an individual life insurance policy, don't cancel your SGLI until your new policy has been issued and the first premium paid.  Here are some questions to answer as you determine if and how to replace SGLI:

1. Do you need it?

This is the easy part. If you're not responsible to anyone for anything, then you probably don't need life insurance. For example, if you are a single, recent college graduate with no debt, kids, or financial obligations. But that's not most of us. If you're married, have children, or take care of aging parents, you more than likely need life insurance.

2. How much do you need?

There's no magic formula, but you can start by figuring out what you want life insurance to do for you or your loved ones. Do you simply want a policy to cover your funeral, debts, and unpaid medical bills? Or, are you worried about providing enough college money for your children or retirement savings for your spouse if you suddenly pass away? Some experts say you should buy a policy that's seven to ten times the amount of your income. But that's not the answer for everyone - a lot depends on your specific situation. You need to ask yourself some key questions to decide what fits your budget and your circumstances.  On-line calculators available at www.usaa.com or the Department of Veterans Affairs (www.va.gov) can help you calculate the right amount of insurance.  In addition, you can talk to an insurance agent or financial adviser for advice.

3. How long do you need it?

Consider the kind of insurance you want: term or permanent life insurance. Buying term insurance is like renting a house, says Insurance Information Institute executive Carolyn Gorman. "It's renting the insurance because it only lasts for a certain term - 10 years, 20 years, or whatever you choose," she says. Permanent insurance, on the other hand, generally has a higher premium initially than term but is designed to last for a lifetime. The policy also builds cash value that you can borrow against or withdraw if you no longer need life insurance.

4. What kind do you need?

Once you decide between term and permanent life insurance, you have one more step: choose your plan. Both types of life insurance have several options. Make sure you research the information, consult with a financial adviser, and choose carefully. But whatever you do, don't delay. The cost of insurance increases with age.

Coverage for you: One option is to convert your SGLI to a five-year renewable term policy with Veterans' Group Life Insurance (VGLI), which will provide up to $400,000 in coverage.  If you're in poor health or use tobacco, this can be a good value.  However, if you're healthy, you might find a more affordable option with a commercial life insurance company.

Coverage for your spouse: Even if your spouse doesn't earn an income, he or she is an important part of your family's financial security. Think of it this way: what would it cost to replace the childcare, meal preparation, and other household tasks your spouse performs? These expenses could be offset by a life insurance policy should your spouse die unexpectedly.

Coverage for your kids: You received free coverage for your children under SGLI. To replace this coverage, you may be able to add a child rider to your new policy. These riders cover your children, usually up to age 25, and normally can be converted into permanent policies when your children become adults.

Need help figuring out how much life insurance you need? Call USAA at (800) 531-8518.