Insurance Needs for Military Families

I am in the Army. Do I have special insurance needs?

Members of the military and their families do have some special needs -- especially when they are deployed -- but they also have some special benefits. Here's what military families need to know about their insurance:

Life insurance. Military personnel have access to one of the best deals in life insurance: Servicemembers' Group Life Insurance costs just 6.5 cents per $1,000 of coverage per month, or $312 per year for the maximum $400,000, regardless of your age or health. You can also get $100,000 in coverage for your spouse. Members of the military should sign up for this policy before buying any other life insurance. For more information, go to the U.S. Department of Veterans Affairs SGLI site.

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But $400,000 may not be enough to cover all of your family's needs if you die, and the good deal on premiums ends when you leave the military. The life insurance calculator at Kiplinger.com can help you figure out whether you need to buy more insurance.

Be aware that members of the military can't just buy any life-insurance policy. Some policies have specific war exclusions or charge high rates if you plan to travel to a foreign country, making the coverage worthless or very expensive if you're about to be deployed. SGLI covers all of those special needs for members of the military, and it's important to make sure any additional insurance you're considering provides full coverage for service members, too. Be up front about your job with the agent or insurer when you're shopping for coverage and submitting the application, and check the policy for any war-related exclusions.

It's also important to review your insurance options at least six months before you leave the military. You can convert your SGLI policy into a Veterans' Group Life Insurance (VGLI) policy if you submit your application within one year and 120 days after discharge from the military. During the first 120 days after separation, you can qualify for VGLI without a medical exam; after that, an exam is required. If you're healthy, you may find a much better deal on your own. But VGLI may be your best bet if you have a medical condition that would cause private insurers to raise your rates or reject your application.

Regardless of your age, be wary of salespeople trying to sell you high-fee life insurance -- especially if you haven't maxed out your SGLI. State and federal regulators have cracked down on agents and companies that target service members with expensive insurance they don't need. See Avoiding Scams That Target the Military for more information.

Auto insurance. Service members generally have the same car-insurance needs as people who aren't in the military. But you need to take some extra steps before deployment.

Tell your insurer that you're being deployed and let the company know if other family members may be driving your car while you're gone. You may get a discount if the car isn't used for commuting.

If you're putting your car in storage, your state may not allow you to drop auto-insurance coverage unless you hand in your license plates. But you can cut your premiums in half -- or more -- by lowering your liability coverage to the state minimum and dropping collision coverage, says June Walbert, a certified financial planner with USAA. Call your insurance company or ask your state insurance department about the specific rules for your state. Go to Kiplinger's Insurance page to find contact information for your state regulator.

However, maintain your comprehensive coverage. It will pay out if your car is damaged or stolen while in storage. You can lower the rate by raising your deductible.

Homeowners insurance. If your family remains in your home or apartment while you are deployed, then you don't need to change your homeowners or renters insurance. But if you rent out the house while you're gone, contact your insurer and ask about your options. If your furnishings are going with you, then you may be able to switch to a less-expensive policy that covers only the structure, and let your tenant get renters insurance to cover his or her possessions. Your mortgage lender may have specific coverage demands, though, so check with the lender before making any changes.

Also let your insurer know if you're putting possessions in storage while you're gone. You may be able to buy an inexpensive renters-insurance policy to cover the items if they are damaged or stolen while you are away.

For more information about personal-finance issues for military families, see our Military Family Money Guide.