A recent survey from The First Command Financial Behaviors index and published on Heraldonline.com indicates that permanent life insurance is growing in popularity among both military and general households. Almost half of those who don’t own permanent insurance say that are considering adding it to their financial toolbox.
In fact, 46% of middle-class military families who don’t own a permanent life insurance policy say they are likely to consider purchasing it for themselves or someone else in their household. This is up 4% from a 2011 study. The general population indicated the same trend with 42% saying they are likely to buy. This is up 2% from 2011.
The findings indicate a growing interest in permanent life coverage as time-tested tool for managing long-term financial risk. During the economic turmoil consumers experienced how a market downturn can threaten their financial strategy so the old sales pitch, “buy term and invest the difference” has lost some of it’s appeal.
Permanent life insurance is growing in popularity among both military and general population households, with almost half of those who don’t own this type of coverage now saying they are likely to consider adding it to their financial toolbox.
The latest survey results from the First Command Financial Behaviors Index® reveal that 46 percent of middle-class military families (senior NCOs and commissioned officers in pay grades E-6 and above with household incomes of at least $50,000) who don’t own a permanent life policy say they are likely to consider purchasing it for themselves or someone in their household. This level of interest represents a significant upward trend, climbing from 32 percent in 2012 and 28 percent in 2011.
A similar pattern has emerged in the general population, with 42 percent of middle-income respondents who don’t own a permanent life policy saying they are likely to buy. This compares to 18 percent in 2012 and 20 percent in 2011.
“These findings indicate a growing interest in permanent life coverage as a time-tested tool for managing long-term financial risk,” said Scott Spiker, CEO of First Command Financial Services, Inc. “The old pitch to ‘buy term and invest the difference’ lost some of its appeal during the economic turmoil, when many consumers experienced how a market downturn can threaten a seemingly sound financial strategy.”
The trend is particularly significant for men and women in uniform, who are already much more likely to own permanent life insurance products than their civilian counterparts. The Index reveals that permanent life insurance products are currently owned by 48 percent of military respondents compared to just 33 percent of the general population households.
The most popular form of permanent life insurance coverage among the military is whole life insurance. These products are owned by 32 percent of survey respondents. Second in popularity is universal life, which is owned by 15 percent of respondents.Military families are turning to these commercial products as supplemental coverage to their government benefits. Active-duty personnel are eligible for up to $400,000 in Servicemembers’ Group Life Insurance, commonly known as SGLI. They may add optional spousal coverage of up to $100,000 and dependent coverage of up to $10,000. After leaving the service, military personnel may convert SGLI to Veterans’ Group Life Insurance (VGLI); however, premiums may be higher and are based on the age of the insured.
“So many military families, if they are insurable, opt for supplemental commercial policies in order to increase their overall coverage now and provide longer-term protection for their post-military lives,” Spiker said. “This extra coverage allows them to build a risk management program that more thoroughly addresses the unique risks of military service – risks that can include war-related death. At First Command we see that risk firsthand. Since Sept. 11, 2001, almost 200 of our clients have died in combat. Out of this group 86 percent had life insurance products in force through First Command totaling more than $18.8 million.”
First Command surveyed consumers on their life insurance coverage as part of its September observance of Life Insurance Awareness Month, which was created by the LIFE Foundation in response to growing concern about the large number of Americans who lack adequate life insurance protection.
The most common form of permanent life insurance owned by military is whole life which is owned by 32% followed by universal life, which is owned by 15%. Military families are turning to commercial products as supplemental coverage to their government benefits. Military personnel are opting for supplemental commercial policies in order to increase their overall coverage now and provide longer-term protection in their post military lives.