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An expanding army: Permanent life insurance coverage in military

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Demand for permanent life insurance has reached a new high in America’s career military, where three out of four families now report owning this type of coverage, according to new research.

First Command’s annual life insurance survey reveals that 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 permanent life insurance.

The demand is expected to keep growing. The latest findings of the First Command Financial Behaviors 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, 42 percent of survey respondents own. 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 permanent life coverage, statistically unchanged from last year and up just 4 points from 2011. The most popular type permanent coverage in the general population is whole life, which is owned by 27 percent of families.

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 purchase permanent insurance products as 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.

First Command conducts an annual life insurance survey of military families 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.

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