military insurance

What do you really need?

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by Bennett Leigh

Insurance. Everyone needs it, but few hope to ever use it. There are so many types of coverage out there today, so how do you know what you need or how much you need? The key is finding a balance — a policy that gives you enough coverage but doesn’t cost too much. Some options you just don’t need, so why pay extra for them? Here are some types of insurance and some pointers on getting and paying for what you need:

Life Insurance

Life insurance is a biggie for those serving in the military. At any time, you could be called up to head to a dangerous part of the world, and you want to ensure your family is covered if anything happens.

Fortunately, eligible service members are automatically issued the maximum SGLI coverage of $400,000. Covered members receive 120 days of free coverage from their date of separation.

Those eligible for automatic coverage include:

  • Active duty member of the Army, Navy, Air Force, Marines, or Coast Guard
  • Cadet or midshipman of the U.S. military academies
  • Member, cadet, or midshipman of the Reserve Officers Training Corps (ROTC) engaged in authorized training and practice cruises
  • Member of the Ready Reserve or National Guard and are scheduled to perform at least 12 periods of inactive training per year
  • Service member who volunteers for a mobilization category in the Individual Ready Reserve (IRR)

But there may be times when you need some extra coverage — maybe you have small children and want to make sure their college expenses are covered, or a large mortgage that you would want to be paid off if something happened to you. But once your children are out of the house and college, or once your house is totally yours, you would only need to think about the annual taxes you would need to pay on it, so your coverage amount could drop.

Once your separate from the military, if you are eligible for VGLI, that may be a good route to take, but you might get a better “deal” from a private insurance company, depending on your situation at the time, so it pays to do your homework.

Homeowner’s Insurance

If you own your own home, you will need to get at least some homeowner’s insurance. Most home policies cover fire and many natural disasters (but not earthquakes or floods), and most have deductibles between $1,000-$2,500 per claim.

Take a look at your home. How much would it cost to replace it? To replace your appliances and other belongings inside? Remember, the price you paid for your home included the land it is built upon, so the cost to replace the home itself will be less than what you initially paid for it. Often times, you can take a look at your tax records for your home, where it often lists the appraised value of the land and its improvements. That may be a good starting point when considering how much coverage you need.

Do you have any expensive jewelry or other items in your home? If so, you may want to consider a valuable personal property addition to your coverage. Your typical homeowner’s policy covers each item up to a certain dollar amount, so if you inherited your grandmother’s jewelry valued at roughly $5,000, you may want to add this coverage.

There are lots of other add-ons you can get — for computers and other equipment, for outbuildings and docks, etc. Take a look at your needs before you settle on your coverage.

Renter’s Insurance

Most active duty service members and their families will rent a home or apartment at at least one of their duty stations. That’s where renter’s insurance comes in to play. Your landlord likely has insurance, but it often only covers the building itself — not any of your belongings. Renter’s insurance is actually very reasonable, so it certainly is one type you should definitely consider. Take a look at your belongings, and put a reasonable cost to replace them. There is no need to pay for more coverage than you will actually need. Look at the deductibles, too. You may be more comfortable with a $1,000 deductible, but then, you may prefer to pay more for your policy and have a $500 deductible. Take a look at how much you are paying a year and see if it will make up the difference if you do need to make a claim.

Auto Insurance

Most states require at least liability insurance, so if you own a vehicle, auto insurance is, well, automatic.

Obviously, you get better prices if you have a good driving record. If you do, use that as leverage to get the best price. Again, so your homework and check out at least a few companies. Some have special rates for members of the military, and many bundle insurance with other policies, such as homeowner’s or renter’s insurance.

The amount of coverage you get really depends on your situation. Did you just finance a brand-new car? You will likely have to carry full coverage as long as you are paying for your vehicle. Is your car older and paid off? You probably won’t need much coverage above liability. The basic rule of thumb is that if your annual insurance costs would be as much or more than what your vehicle is worth, full coverage is not worth it.

There are two basic types of claims and coverage for auto policies — comprehensive and collision. Comprehensive is likely the one you would use more. It covers things like a cracked windshield and tree branches falling on your vehicle… basically everything that may happen to your car when no one is driving it. Collision covers damages to your vehicle and the other person’s vehicle if you are in an accident and are found at fault. If an accident is someone else’s fault, their insurance should cover your damages. But beware if someone does not have insurance or does not have enough coverage. You might be on the hook for at least your deductible. It depends on the laws in your state.

Many people choose to have a smaller deductible for their comprehensive coverage and less for collision, since you likely will use the comprehensive more often. Comprehensive deductibles can range from $0 to $500 and up. Collision deductibles typically range from $500-$2000. The cost of your policy will depend on which deductibles you choose.

Experts agree that liability insurance is one area where you should not skimp. If you get in an accident and you are at fault, you will be on the hook for any medical expenses and damages that your insurance does not cover.

Final Word

If you are still at a loss, speak to a financial advisor on a nearby installation, or speak with a few insurance representatives — get an idea of what you need and what you would be paying. It’s always good to get about three quotes — just make sure you are comparing apples to apples, and that the company you go with is reputable (the Internet is a great resource to check out reviews of any business out there, but just read reviews with a grain of salt, and using your common sense.