Y O U R I N S U R A N C E N E E D S1P E R S O N A L F I N A N C I A L M A N A G E M E N T P R O G R A M Your Insurance Needs 1.

Y O U R I N S U R A N C E N E E D S 1P E R S O N A L F I N A N C I A L M A N A G E M E N T P R O G R A M

Your Insurance Needs

Your Insurance Needs

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Y O U R I N S U R A N C E N E E D S 2

Purpose of InsurancePurpose of Insurance

To provide protection from financial loss.

Your Choices:

•Avoid Risk

•Reduce Risk

•Retain Risk

•Transfer Risk

To provide protection from financial loss.

Your Choices:

•Avoid Risk

•Reduce Risk

•Retain Risk

•Transfer Risk

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Y O U R I N S U R A N C E N E E D S 3

The Life-Cycle Approach to Insurance Needs

The Life-Cycle Approach to Insurance Needs

•Major Life Events Determine Needs– Housing Situations

– Family Situations

– Accumulation of Assets

– Retirement

– Death

•Are you covered?

•Major Life Events Determine Needs– Housing Situations

– Family Situations

– Accumulation of Assets

– Retirement

– Death

•Are you covered?

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Y O U R I N S U R A N C E N E E D S 4

Single in QuartersSingle in Quarters

• Renter’s Policy:

– What’s covered in Government Quarters?

• Life Insurance:

– Is anyone else depending on your income?

– Final Expenses only - SGLI is enough

• Renter’s Policy:

– What’s covered in Government Quarters?

• Life Insurance:

– Is anyone else depending on your income?

– Final Expenses only - SGLI is enough

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Y O U R I N S U R A N C E N E E D S 5

Moving Off-BaseMoving Off-Base

Renter’s Policy

Make sure your property is covered at all times, at replacement cost levels!

Renter’s Policy

Make sure your property is covered at all times, at replacement cost levels!

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Y O U R I N S U R A N C E N E E D S 6

Buying a CarBuying a Car

•Auto Insurance

– Liability - 100/300/50?

– Collision and Comprehensive

– Uninsured/Underinsured

– Medical payments

•Optional

– Rental Car

– Towing and Labor

– Gap

•Auto Insurance

– Liability - 100/300/50?

– Collision and Comprehensive

– Uninsured/Underinsured

– Medical payments

•Optional

– Rental Car

– Towing and Labor

– Gap

Know your state

requirements!

Know your state

requirements!6

Y O U R I N S U R A N C E N E E D S 7

Ways to Save on Car InsuranceWays to Save on Car Insurance

•Do not buy car insurance from your car dealership

•Comparison Shop - check 3 companies

•Increase your deductibles•Tickets, claims and accidents make a

BIG difference in cost•Be selective when lending your car

•Do not buy car insurance from your car dealership

•Comparison Shop - check 3 companies

•Increase your deductibles•Tickets, claims and accidents make a

BIG difference in cost•Be selective when lending your car

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Y O U R I N S U R A N C E N E E D S 8

Ways to Save (cont.)Ways to Save (cont.)

•Maintain coverage while on deployment•Coordinate coverage•Ask for discounts

– Good Driver Discount– Safe Vehicle Discount– Good Student Discount– Low Mileage Discount– Internet Discount

•Check your credit report

•Maintain coverage while on deployment•Coordinate coverage•Ask for discounts

– Good Driver Discount– Safe Vehicle Discount– Good Student Discount– Low Mileage Discount– Internet Discount

•Check your credit report

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Y O U R I N S U R A N C E N E E D S 9

Getting MarriedGetting Married

•Renter’s Policy

•Auto Policy

•Dental Health Program

•Health/TRICARE Enrollment - DEERS•Life Insurance

– Number of Wage Earners in Your Family

– Change Your SGLI Beneficiary Form

•Renter’s Policy

•Auto Policy

•Dental Health Program

•Health/TRICARE Enrollment - DEERS•Life Insurance

– Number of Wage Earners in Your Family

– Change Your SGLI Beneficiary Form

Review all policies and adjust as necessary.Review all policies and adjust as necessary.

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Y O U R I N S U R A N C E N E E D S 10

Having ChildrenHaving Children

• Life Insurance– Needs change dramatically

• FSGLI– Spouse - up to $100,000, cost based on age,

monthly premiums deducted from member’s pay

– Children - $10,000 free

• TRICARE Enrollment

• Dental – When to enroll

• Life Insurance– Needs change dramatically

• FSGLI– Spouse - up to $100,000, cost based on age,

monthly premiums deducted from member’s pay

– Children - $10,000 free

• TRICARE Enrollment

• Dental – When to enroll

Review all policies and adjust as necessary.Review all policies and adjust as necessary.

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Y O U R I N S U R A N C E N E E D S 11

Buying a HomeBuying a Home

•Homeowner’s Insurance– Cover your home

– Cover your personal property

– Cover your back side! Liability

– Ask for replacement cost

•Life Insurance– Needs increase based on the mortgage

•Homeowner’s Insurance– Cover your home

– Cover your personal property

– Cover your back side! Liability

– Ask for replacement cost

•Life Insurance– Needs increase based on the mortgage

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Y O U R I N S U R A N C E N E E D S 12

Increasing AssetsIncreasing Assets

•“Umbrella” Insurance

– Is it necessary?

– Asset protection

– Inexpensive

– Coordinate with other coverages

•Long Term Care

– Consider between 50-55

•“Umbrella” Insurance

– Is it necessary?

– Asset protection

– Inexpensive

– Coordinate with other coverages

•Long Term Care

– Consider between 50-55

Review all policies and adjust as necessary.Review all policies and adjust as necessary.

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Y O U R I N S U R A N C E N E E D S 13

DivorceDivorce

•All policies need to be reviewed and re-issued in your name

•Life Insurance

– Plans for children

– Other issues

•Review and update beneficiary designations (different from your Page 2!)

•All policies need to be reviewed and re-issued in your name

•Life Insurance

– Plans for children

– Other issues

•Review and update beneficiary designations (different from your Page 2!)

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Y O U R I N S U R A N C E N E E D S 14

Retirement/SeparationRetirement/Separation•Life

– SGLI to VGLI Conversion

– SGLI to Commercial Policy

– Replace with New Insurance

•Health/Dental– Retiree Enrollment required

– Supplemental Policy

•Disability– Cover 60-80% of your annual income

•Life– SGLI to VGLI Conversion

– SGLI to Commercial Policy

– Replace with New Insurance

•Health/Dental– Retiree Enrollment required

– Supplemental Policy

•Disability– Cover 60-80% of your annual income

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Y O U R I N S U R A N C E N E E D S 15

Survivor Benefits for Active DutySurvivor Benefits for Active Duty

• Death gratuity ($100,000)

• SGLI ($400,000)

• DIC

• Social Security

―$255 Lump Sum

―Children’s benefit

• VA Education Benefits

• Death gratuity ($100,000)

• SGLI ($400,000)

• DIC

• Social Security

―$255 Lump Sum

―Children’s benefit

• VA Education Benefits

• SBP

• Basic Funeral & Family Transportation

• No-Cost Final Move

• BAH or Housing (12 months)

• Pay for Unused Leave & Arrears in Pay

• SBP

• Basic Funeral & Family Transportation

• No-Cost Final Move

• BAH or Housing (12 months)

• Pay for Unused Leave & Arrears in Pay

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Y O U R I N S U R A N C E N E E D S 16

Shopping TipsShopping Tips

•Know what you need

•Compare costs and benefits

•Understand your policy (ask lots of questions)

•Don’t be talked into anything – wait a few days to make a final decision

•Know what you need

•Compare costs and benefits

•Understand your policy (ask lots of questions)

•Don’t be talked into anything – wait a few days to make a final decision

Remember – It’s Your Money!Remember – It’s Your Money!

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Y O U R I N S U R A N C E N E E D S 17

Focus on Life Insurance:How Much Do You Need?

Focus on Life Insurance:How Much Do You Need?

•A balance between what existing insurance and assets you currently have and what needs will arise if you die.

•Check out the Life Insurance Needs Calculator at www.va.gov.

•A balance between what existing insurance and assets you currently have and what needs will arise if you die.

•Check out the Life Insurance Needs Calculator at www.va.gov.

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Y O U R I N S U R A N C E N E E D S 18

Focus on Life Insurance:What kind do you need?Focus on Life Insurance:What kind do you need?

Funeral Expenses and Personal DebtsFuneral Expenses and Personal Debts

Spousal IncomeSpousal Income

MortgageMortgage

Child’s IncomeChild’s Income

College FundCollege Fund

Estate PlanningEstate Planning

2020 4040 6060 8080

BirthBirth DeathDeath

Whole Life InsuranceWhole Life Insurance Term InsuranceTerm Insurance

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Y O U R I N S U R A N C E N E E D S 19

Term InsuranceTerm Insurance

• Protection for a limited period of time

• Face amount paid if insured dies during specified period

• Typically 1, 5, 10, 15, 20 year terms

• Premiums generally level for entire term

• Premiums low when young, much higher when older

• SGLI/FSGLI are term insurance

• There is no cash value

• Protection for a limited period of time

• Face amount paid if insured dies during specified period

• Typically 1, 5, 10, 15, 20 year terms

• Premiums generally level for entire term

• Premiums low when young, much higher when older

• SGLI/FSGLI are term insurance

• There is no cash value

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Y O U R I N S U R A N C E N E E D S 20

Permanent InsurancePermanent Insurance

• Aka Cash Value

• Three major types– Whole Life

• Premiums much higher than term in early years

• Has cash value

• Policy in effect as long as premiums are paid

– Universal Life• More flexible than while life

• Can stop or reduce premiums

• Cash value earns interest

– Variable Universal Life• Like Universal life, but with investment options

• Higher risk

• Aka Cash Value

• Three major types– Whole Life

• Premiums much higher than term in early years

• Has cash value

• Policy in effect as long as premiums are paid

– Universal Life• More flexible than while life

• Can stop or reduce premiums

• Cash value earns interest

– Variable Universal Life• Like Universal life, but with investment options

• Higher risk

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Y O U R I N S U R A N C E N E E D S 21

ComparisonComparison

Advantages:

Term―Lower cost

―Good for limited duration needs

Whole Life―Insurance for life

―Builds cash value

―Additional features

―Tax deferred growth

Advantages:

Term―Lower cost

―Good for limited duration needs

Whole Life―Insurance for life

―Builds cash value

―Additional features

―Tax deferred growth

Disadvantages:

Term― No cash value

― Cost increases with age

Whole Life― Much higher cost

in earlier years

― More complexity

― Generally low return

Disadvantages:

Term― No cash value

― Cost increases with age

Whole Life― Much higher cost

in earlier years

― More complexity

― Generally low return

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Y O U R I N S U R A N C E N E E D S 22

Common MistakesCommon Mistakes

• Not understanding its purpose

• Buying as a savings vehicle

• Not understanding what you are buying

• Too much trust in the agent

• Holding a policy forever

• Buying unnecessary insurance

• Being “talked” into buying

• Not understanding its purpose

• Buying as a savings vehicle

• Not understanding what you are buying

• Too much trust in the agent

• Holding a policy forever

• Buying unnecessary insurance

• Being “talked” into buying

Buy insurance, don’t be sold it!Buy insurance, don’t be sold it!

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Y O U R I N S U R A N C E N E E D S 23

Organize Your RecordsOrganize Your Records

Record Important

Information!

Record Important

Information!

Keep a Copy at Home!

Keep a Copy at Home!

Keep a Copy in a safe place ‘off-site’!

Keep a Copy in a safe place ‘off-site’!

Take care of your

survivors!

Take care of your

survivors!

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Y O U R I N S U R A N C E N E E D S 24

Your Insurance NeedsYour Insurance Needs

•Determine your needs according to life-cycle events

•With every event, review all insurance

•Shop around for the best deal

•Buy insurance, don’t let it be ‘sold’ to you

•Use the VA’s Life Insurance Needs calculator

•Organize your insurance records

•Determine your needs according to life-cycle events

•With every event, review all insurance

•Shop around for the best deal

•Buy insurance, don’t let it be ‘sold’ to you

•Use the VA’s Life Insurance Needs calculator

•Organize your insurance records24

Y O U R I N S U R A N C E N E E D S 25

Print Your CertificatePrint Your Certificate

Click on the following link to add your name to the certificate and print it:

Your Insurance Needs