Military Life

New Families – How to Find the Best Life Insurance Policy for You

We should never fool ourselves into believing that there is such a thing as complete security for military families. To live by making a home wherever we go and uprooting on a regular basis, with a change being the only constant, comes with a whole slew of challenges, but one of them is particularly difficult for the families that have just welcomed a new member. Nothing beats the joy of bringing a child into this world, but as a parent in a military home filled with uncertainties, you strive to provide the greatest amount of security as humanly possible.

Enter: your life insurance. As a military family member, you’re most likely already familiar with Family Servicemembers’ Group Life Insurance (or FSGLI for short), and you know its perks and limitations. However, your life on the move is often riddled with very specific issues, and your savings efforts may need an extra nudge to have enough coverage for your needs.

Learn about spouse coverage

As generous as SGLI may be during the active service of your spouse, the coverage your family gets is far from ideal. This may not be the happiest of topics to consider, but considering the continuously growing costs of life, including the basics such as food, healthcare, housing, all the way to education, you need to think and plan as early as possible.

In case your spouse dies on active duty, the premium is unlikely to be enough to cover these rising costs. Despite the fact that the primary purpose of any life insurance is to provide a source of stable income for the surviving family members, it’s difficult to say if this number will suffice in the years to come, in such an unstable economy. So, as a young family, you need to understand your options and work from there.

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Term vs permanent policies

Term life insurance is temporary, and requires a lower initial payment, while permanent policies last you a lifetime, but they also come with a heftier price tag. They both come with certain perks, but based on the info you obtain regarding your existing military insurance, you can make a decision that’s best for your situation.

Some parents start with permanent life insurance only to add term policy later on, while some military families can do well with the support of just one, whether it’s permanent or term.

Diversifying your savings

Most new parents consider their life insurance as a way to provide their kids with financial stability in case of an early demise, so that they can use it to continue covering the mortgage or pay the tuition. However, sometimes these policies alone are barely enough to cover essential lifestyle needs, hence the need for added financial security in the form of other savings policies.

Learn the difference between fixed deposit vs single endowment, both of which have their benefits, while the latter is better suited for long-term savings goals, such as your child’s education, or even your own retirement. They also make for a great choice due to their higher interest rates and lower deposit requirements, while the longer savings period means more security for your future.

Name your beneficiary

As a new mom, you’ll be tempted to instantly name your newborn as your primary beneficiary. However, this may pose a range of issues down the road, especially if your child is not of age when the time comes for them to inherit your assets. You’ll agree that an 18-year-old is not always the best choice for suddenly being handed an incredible sum of money – without you or your spouse there to make sure they use it responsibly.

It would be best to appoint an adult as a trustee to handle the insurance money based on your instructions, which will be ensured by your attorney. Setting up a separate trust for your life insurance to be passed onto your kids is a simple way to make sure that the money ends up in the right hands, while also being used in your child’s best interests.

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Consider education and other costs

In order to make a realistic evaluation of your children’s and your own lifestyle needs in case of the demise of your spouse, you need to crunch some numbers. Have a conversation with your spouse and note down your existing expenses, such as an ongoing mortgage, any debt you need to cover, as well as your essential annual spending.

Add an approximate sum of money it would take to cover your kids’ college expenses and other needs, and then you’ll get a better understanding of your future financial needs. Of course, it’s best to talk to a professional, and even get advice from fellow military parents, so that you can make an informed decision and do what’s best for you and your family.

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