Military families own whole life at a higher rate than the general population. 33% of middle-class civilian families report they own some form of permanent coverage
First Command’s 13th annual life insurance survey reveals that half of career military families own a whole life insurance policy.
FORT WORTH, Texas – As demand for permanent life insurance coverage continues to grow, whole life has emerged as the No. 1 choice of career military families.
First Command’s 13th annual life insurance survey reveals that 51% of middle-class military families (commissioned officers and senior NCOs in pay grades E-5 and above with household incomes of at least $50,000) own whole life insurance. That’s up one point from last year and a record high.
The First Command Financial Behaviors Index® reveals that 74% of military respondents own some form of permanent life coverage. Less common types of permanent coverage among the military include universal life and variable life, which have ownership rates of 29% and 24%, respectively. Over 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.
“Military families continue to show strong interest in the benefits of whole life insurance and other types of permanent coverage,” said First Command’s National Director of Advisor Operations John Osarczuk. “Since our first life insurance survey in 2011, demand has been on a long-term, upward trend. Back then just 42 percent of military respondents reported owning some form of permanent coverage and 28 percent said they were likely to purchase. Over the past decade demand has continued to grow because military families appreciate how these products can meet their unique needs.”
What Do Military Families Value Most?
Permanent life insurance is highly valued for the lifetime protection it provides. Military families are using it to cover permanent needs, like final expenses or income for a spouse and children in the event of premature death.
The second most popular type of insurance in military families is term life. It is held by 47% of respondents.
“Term life insurance is a cost-effective option, but it lacks the lifetime protection of permanent life insurance and therefore has a more focused use,” Osarczuk said. “Because these products provide coverage for a set number of years, they are best used to cover temporary needs, like paying for a child’s college tuition or making mortgage payments. We believe that both permanent and temporary life insurance have a place in our clients’ financial plans. We conduct a thorough analysis to determine the specific needs of each client’s survivors before making any specific life insurance recommendation.”
Military families are buying commercial insurance products to beef up their government benefits. Active-duty personnel are eligible for up to $500,000 in Servicemembers’ 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.
When asked why they purchased life insurance, military respondents pointed to:
- Paying final expenses (49%)
- Leaving an inheritance (47%)
- Building cash value and saving for retirement (47%)
- Covering large debts that others would be responsible for (38%)
- Replacing income for beneficiaries (35%)
When asked to name the most important features of a life insurance policy, the No. 1 pick by military respondents was “lifelong coverage.”
Other important features cited by respondents included:
- low monthly premium payment
- large death benefit
- access to a cash value account
- reputation of the insurance company
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.
“Permanent life insurance is a flexible and valuable product,” Osarczuk said. “We continue to see strong demand because this product allows career military families to more effectively and confidently strengthen their family’s financial security.”
Meanwhile in the general population, the most popular form of life insurance coverage is term life. The ownership rate for term life insurance products is 33%. The Index reveals that 33% of middle-class civilian families own some form of permanent coverage. The most popular permanent product is whole life, which is owned by 26% of families. Ownership rates are 7% for universal life and 3% for variable life in the general population.
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. For more details on our research, please email MarketingInbox@firstcommand.com. http://www.firstcommand.com/fbi/
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.
About First Command
First Command Financial Services and its subsidiaries, including First Command Brokerage Services, First Command Advisory Services and First Command Bank, coach our Nation’s military families in their pursuit of financial security. Since 1958, First Command Financial Advisors have been shaping positive financial behaviors through face-to-face coaching with hundreds of thousands of client families.
