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“Benefits Briefs” May Be Life Insurance Sales Pitches in Disguise

Most of us have seen it happen: The first sergeant or senior master chief announces that there’s going to be a ‘benefits briefing’ at 0900 in the classroom. And when you get there, there are some clean cut men in their 40s sporting khaki pants and golf shirts with some acronym on their chest.

They’re doing their best to masquerade as Veterans Administration employees.

They’ll hand out a stack of forms and tell you they’re signing people up for SGLI supplemental coverage, and tell you to select one of the options.

Their materials will have official looking seals, logos and names on them like “Veterans Benefits Network” or some such gobbledygook. And with a minimum of fuss, you sign up for some level of coverage, and the premiums will be deducted from your payroll.

Is it a scam? It depends.

In most cases, the insurance is real – these are usually underwritten by legitimate life insurance companies who will pay out a death claim if it comes to that. Some companies do not pay out benefits if the insured dies due to acts of war or terrorism.

The insured may never actually receive an illustration or written policy — which is may be a violation of state law: Life insurance is a contract – and you are generally entitled to receive a breakdown of premiums, exclusions, claims procedures and the outlook for increasing premiums, if any, as you age.

In some cases, too, the life insurance you receive is not a good deal, compared to what you can buy elsewhere. Many times, by shopping around other term insurance carriers, you can find much cheaper coverage with larger face amounts – especially if you are willing to take a medical exam.

Watch out for these warning signals that suggest that your agent may be either ignorant of life insurance, the law, or running a scam on military members:

  • The agent is presenting on installations without specific authorization from the DoD or your base solicitations officer. A recent law substantially restricts the ability of most agents and financial representatives to solicit and present insurance and investment products on post.
  • The agent sells the insurance product as an “investment.” Except in the case of variable universal life products, insurance is insurance, not an investment. Permanent insurance policies (i.e., not “term” will also have a ‘cash value’ component.)
  • The agent pressures service members to rush through applications and complete allotment forms.
  • Agents posing as “benefits advisors” or “benefits counselors.” They are not. They are insurance salespeople.
  • Absence of a valid insurance license issued by the Department of Financial Regulation or Department of Insurance in your state.
  • You are pressured to sign an allotment form or authorize a bank withdrawal of premium even if you have not maxed out your available SGLI coverage. They aren’t going to beat SGLI on small supplemental term life policies.

So let’s say you have the maximum SGLI coverage, but you need or want additional coverage. What are your alternatives?

You can purchase additional term life insurance online from a variety of websites – or go through an insurance agent. You may be able to find very affordable simple term life coverage online – especially if you are in good health and willing to take a medical exam. Many of the best life insurance products aren’t sold online, but marketed exclusively through agents.

When shopping for term life insurance, ideally, look for these important features:

  • Guaranteed renewability until at least age 70. That means you can renew the policy, regardless of your medical condition, and regardless of whether you stay in the military.
  • No war exclusions.
  • No exclusions for accidents in non-commercial aircraft.
  • No exclusions for deaths incurred due to international travel.
  • A waiver of premium rider. This rider guarantees that if you become disabled, the insurance company will pay the premiums on your behalf. You don’t want to get sick or hurt, lose your income, and then lose your life insurance just when you are sick because you can’t pay the premiums.
  • An option to convert to a permanent policy – either a whole life or universal life policy.
  • Premiums you can afford. Again, many times, the policies out in the real world provide much more benefit per premium dollar than those being hawked by those guys posing as government “benefits counselors.”
  • Short terms, such as 1 year annually renewable term and 5 year term available. Longer terms aren’t necessarily better – they are more costly in the short run and rarely save you very much in the long run – especially if you switch insurers.
  • A life insurance rating of A or better from Standard and Poor’s, or the equivalent rating from at least one of the other major ratings agencies: Moody’s and Fitch. This is a third party assessment – an external inspection, if you will – of the life insurance company’s financial stability and ability to withstand negative economic conditions or unusually high death claims.

The General Orders of Military Life Insurance

Do you want or need whole life or permanent life insurance? Bear in mind the General Orders of Military Life Insurance:

  1. The best insurance to own is the kind most likely to be in place when you die.
  2. The amount of insurance you should own is an amount you can easily afford it. If it’s too expensive, you’ll lapse it, and it’s not going to fulfill military life insurance general order number 1.

Keep those two rules in force, and shop around, and many life insurance decisions will become much more clear.

Further Resources: National Association of Insurance Commissioners – Insurance Issues for Military Servicemembers and their Families.

Department of Veterans Affairs: Servicemembers’ & Veterans Group Life Insurance

Life & Health Foundation:

Contributed by Jason Van Steenwyk

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