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Permanent life insurance coverage hits record high in military

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The men and women of the U.S. armed forces who put themselves daily in harm’s way hold among the nation’s most dangerous occupations. So it should come as little surprise that demand for life insurance is particular high in the military.

You may be interested to learn, however, that policy purchases are not all for term insurance. In fact, as new research shows, three in four military families now own permanent coverage — a new high that reflects growing demand for this type of coverage in the military.

First Command Financial Behaviors Index unveils this finding in its 2015 annual life insurance survey. The company conducts the yearly survey of military families as part of its September observance of Life Insurance Awareness Month, which Life Happens created in response to growing concern about the large number of Americans who lack adequate life insurance protection.

The report shows 75 percent of middle-class military families (commissioned officers and senior NCOs in pay grades E-6 and above with household incomes of at least $50,000) own permanent life coverage. That’s up 7 points from last year. In 2011, just 42 percent of families reported owning some form of permanent life insurance.

First Command expects demand to keep growing. The Index reveals that 44 percent of military families 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 continuing upward trend, climbing 16 points over the past four years.

The most popular forms of permanent life insurance coverage among the military include:

  • Whole life, which is owned by 42 percent of survey respondents. That’s the same ownership level as last year. The Index reveals that 37 percent of those who own whole life policies purchased their coverage in the past five years.

  • Universal life (22 percent, statistically unchanged from last year).

  • Variable life (20 percent, up 8 points).

Demand remains steady in the general population. The Index reveals that 41 percent of middle-class civilian families own some form of permanent life coverage, statistically unchanged from last year and up just 4 points from 2011. The most popular form of permanent life insurance coverage in the general population is whole life, which is owned by 27 percent of families.

At the same time, demand for temporary life insurance coverage has dropped to a new low for military families and reached a record high in the general population. Ownership of term life products has fallen to 33 percent in the military, down 19 points from last year. Almost half of civilian families (48 percent) report owning term life, up six points from last year.

Military families use permanent insurance products to supplemental coverage to their government benefits. Active-duty personnel are eligible for up to $400,000 in Service members’ 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. Supplemental commercial policies allow military families to increase their overall coverage now and provide longer-term protection for their post-military lives.