Company Profiles

Revisiting The Utility Of Whole Life

How First Command coaches financial security for military families

by John Osarczuk

For military families, frequent moves, extended deployments, and the dangers inherent to military service require diligent planning — financially and otherwise. With a lifestyle that includes significant uncertainty, whole life insurance offers military families some important guarantees during a lifetime, which makes it a core element of their financial security strategy.

Recent data reveals military families’ strong preference for permanent life insurance. The latest First Command Financial Behaviors Index of middle-class military families found that 74% of military respondents own some form of permanent life coverage—specifically with 51% of middle-class military families owning whole life insurance policies. This is nearly double the 26% whole life ownership rate among the general population, which the Index revealed 33% of whom own some form of permanent coverage. More than half (52%) of military members without permanent life coverage say they are likely to consider buying a policy for themselves or someone in their household.

What makes whole life so appealing to military families? When asked to name the most important features of a life insurance policy, the No. 1 pick by military respondents was “lifelong coverage.” That’s a feature unique to permanent coverage. Other important features cited by respondents included low monthly premium payment, large death benefit, access to a cash value account and reputation of the insurance company.

Military families’ unique risks of unpredictability due to frequent relocations and time spent away from family, along with the employment challenges that military spouses face due to multiple geographic moves and access to child care and quality education, are concerns to consider when planning for permanent life insurance needs.

Supplementing SGLI for Complete Protection

Every active duty service member is eligible for up to $500,000 of automatic term life insurance through the government’s Servicemembers’ Group Life Insurance (SGLI) program. While this coverage is convenient and budget-friendly, many families may require additional protection. If tragedy strikes, SGLI may not be enough on its own to fully replace income, pay final expenses, cover mortgage balances, and continue funding college savings. This is where individually-owned life insurance becomes important. After leaving the service, military personnel may convert SGLI to Veterans’ Group Life Insurance (VGLI). However, the monthly premiums may be higher initially and are based on the age of the insured.

First Command often recommends that retiring service members take the full Survivor Benefit Plan (SBP) benefit to protect the valuable lifetime pension the family has earned. But SBP only replaces half of that pension. Whole life insurance can be used to make up the half of the pension a spouse will lose if the insured service member predeceases the spouse. First Command partners with highly-rated life insurers to offer permanent and term life insurance products tailored specifically for the military community.

Why Whole Life Appeals to Military Families

There are several reasons why whole life insurance appeals to military families:

  • Provide guaranteed death benefits, income-tax free that last a lifetime, as long as premiums are paid. This gives families confidence their loved ones will be protected no matter what the future holds.
  • Premiums are set when the policy is purchased and will never increase. This premium stability fits well with the military lifestyle.
  • Free of war, terrorism, and combat exclusions that could deny claims related to military duties. Coverage cannot be canceled due to overseas deployments or other hazards of service. At First Command, even if one of our clients has already received deployment orders to a region identified as hot spot or war zone, we are able to offer new life insurance coverage to them. This is rare, if not unheard of, in the industry because of the risks associated with these deployments.
  • The cash value savings component offers tax-deferred growth at guaranteed rates. This allows families to conservatively build savings in a protected account.
  • Guaranteed future insurability makes it easy to purchase additional coverage as needs evolve, without new medical underwriting.
  • Frequent relocations often disrupt military spouse careers and wages, while extended solo parenting periods increase risks. The lifelong guarantees of whole life insurance align well with a mobile military spouse’s protection priorities.
  • At First Command, unlike the common “participating” whole life policies whose outcomes and future costs may be tied to interest rate movements or the company’s performance, our “non-participating” whole life policies have no such ties and are 100 percent contractually guaranteed. Our insistence on this fully guaranteed status goes back to our founder, Lt. Col. Carroll Payne, who believed it was necessary for military families to take some reasonable risk in investing their money if they were to have a chance to achieve their financial goals, but felt just as strongly that life insurance was too important to military families not to be fully guaranteed.

According to the Financial Behaviors Index findings, military families report high levels of satisfaction with their life insurance products. The Index reveals that 88% of military members are completely or very satisfied with their whole life products. And 85% say they are completely or very satisfied with their term life products.

Developing a Recommendation Tailored to Client Needs

When asked to name the most important features of a life insurance policy, the no. 1 pick by military respondents was “life-long coverage.” That’s a feature unique to permanent coverage...

We strive to protect our clients against the risk of financial loss. We evaluate their challenges and coach them in the use of solutions that support the continued pursuit of their financial objectives. We help them rebuild in times of loss. In this way, we provide our clients with confidence that they can meet their long-term financial security, and goals and that their dreams can be realized.

At First Command, we provide both whole and term life policies to meet the diverse needs of the military community. Our role is to advise families on tailored coverage that fits their budget and delivers lifelong protection.

While we offer various insurance solutions, our experience shows whole life insurance provides unique advantages to the military families we serve. The lifetime guarantees deliver peace of mind, the stable premiums fit a mobile lifestyle, and the benefits last from enlistment to retirement and beyond. According to the latest Financial Behaviors Index, whole life insurance remains a fundamental component of financial plans for many military families. It’s trusted protection they can depend on while selflessly serving our country.

However, whole life insurance is not the only option for military families, as costs for whole life insurance are typically more expensive than term life insurance. But unlike whole life policies, term life policies do not provide lifelong guarantees of coverage or the opportunity to build cash values at guaranteed rates. The most important consideration is to get to know clients and their unique goals and needs to identify the insurance solution that is best for them. Since military families have unique needs, understanding the nuances of their situations is important.

Deciding between these two main types of life insurance depends on the client’s specific goals, budget, and time horizon.

Here are some key questions to ask when advising about life insurance:

1.) Life Insurance Goals: What are your specific objectives for obtaining life insurance? Are you seeking income replacement, estate planning, or addressing business needs? Your goals will help determine the amount of coverage you require.

2.) Current Income: What is your present income? If you were to pass away, how much income would your beneficiaries require? This information is crucial in calculating the appropriate coverage amount.

3.) Income Replacement Duration: How long will your beneficiaries require income replacement? Understanding this time frame will assist in deciding between term and permanent life insurance.

4.) Debt Coverage: Do you have any outstanding debts, such as a mortgage or loans, that you would like covered in the event of your death? This consideration can influence the amount of coverage needed.

5.) Other Financial Resources: What other assets or financial resources would your beneficiaries have access to if you were to pass away? This information helps identify any coverage gaps.

6.) Premium Budget: What is your budget for life insurance premiums? The amount you can afford for premiums will guide the options available to you.

7.) Age and Health Status: What is your current age and health status? These factors significantly impact life insurance rates.

8.) Coverage Beyond Age 65-70: Do you anticipate needing coverage beyond the age of 65-70? This consideration can help determine if permanent life insurance is a better fit than term insurance.

9.) Income Protection Duration: If you were to pass away prematurely, how long would your family need income protection?

10.) Locking in Insurability and Premiums: How important is it for you to lock in insurability and premiums today for the future?

These answers will likely point you toward the most suitable option for your clients. Every military family’s needs are unique, so personalized guidance is key.

Recommending whole life or term life insurance merits close consideration within a military family’s comprehensive financial plan. While costs are always a consideration when purchasing insurance policies, one of the most important benefits of whole life insurance is that it goes beyond SGLI to deliver lifelong guarantees, growth potential, and flexibility to support military life. As financial advisors, we owe it to military families to have an in-depth discussion on how permanent protection can strengthen their financial footing for the long run.




About the First Command Financial Behaviors Index®
Compiled by Sentient Decision Science, Inc., the First Command Financial Behaviors Index® assesses trends among the American public’s financial behaviors, attitudes and intentions through a monthly survey of approximately 530 U.S. consumers aged 25 to 70 with annual household incomes of at least $50,000. Results are reported quarterly. The margin of error is +/- 4.3 percent with a 95 percent level of confidence.
About Sentient Decision Science, Inc.
Sentient Decision Science was commissioned by First Command to compile the Financial Behaviors Index®. SDS is a behavioral science and consumer psychology consulting firm with special vertical expertise within the financial services industry. SDS specializes in advanced research methods and statistical analysis of behavioral and attitudinal data.