There is never a good time to discuss insurance. However, it is a very important issue for those retiring from the service. You lose a significant amount of insurance protection when you retire. Replacing or even increasing this protection needs to be an important consideration. Your insurance plan should include all forms of insurance including Life, Property & Casualty, Disability, Liability, Long Term Care, etc. Even if you feel that you have many or all of these in place, this time of transition is a good time to review your needs and make adjustments as necessary. Here are some thoughts:

Life Insurance. A better name might be Survivor Planning because the whole array of survivor benefits and entitlements need to be understood and coordinated. Life insurance is just one part of the Plan. Your Survivor Plan needs to include Veteran Survivor Benefits, Social Security Survivor Benefits, and Private Life insurance. One thing to remember is that while you are on active duty, significant benefits exist for your family. One such benefit is the VA’s Dependency and Indemnity Compensation (DIC). In 2006, this benefit provides an annual tax-free income of over $12,000 for a surviving spouse. A 40-year-old spouse would need more than $220,000 in death benefit proceeds, invested at 5 percent, to produce that same income for his or her lifetime and this would not include inflation protection. However, DIC enjoys cost-of-living protection. Therefore, the actual amount needed would be much higher. There is also Dependent’s Education Assistance, which provides a monthly payment for 45 months of post secondary education available to your spouse and each of your children.  Other active-duty benefits that will be lost upon transition include SGLI, the Service Death Gratuity, one year of no-cost government housing or housing allowances, and three years of free medical benefits. Survivor Benefit Plan (SBP) benefits are also lost unless you elect to participate as a retiree. In terms of lump sum death benefits, you are walking away from $1/2 Million of protection when you retire. Replacement of these benefits will be important to your family.

The Survivor Benefit Plan (SBP) is the principle Veteran's Benefit that you can take with you at retirement. SBP can be a solid foundation for your survivors. Navy Mutual Aid Association believes that for most retirees, SBP is a good value in family protection, especially in light of the 2005 legislation which eliminated any reduction in benefits when your spouse reaches age 62. If you have not made you SBP decision, you should visit the Navy Mutual website, www.navymutual.org, and use the “24/7 Survivor Benefit Analysis Program” called Baseline. It will provide you some excellent data which will help you with this important decision. If you have any questions after running a Baseline, just contact the Association. Navy Mutual has some excellent counselors who can answer all your SBP questions including assisting you with the SBP Election section of DD Form 2656 (series).  Navy Mutual’s Straight Facts About SBP Handout is available on the website and can provide you additional information. If you have already made your SBP decision, this will be an important input for life insurance planning. If you have elected SBP, your Retiree Account Statement from DFAS will provide you with cost and benefit data.

Social Security will also provide a substantial survivor benefit for your spouse immediately upon your death if dependent children under age 18 are still at home and then again as early as age 60. Your annual personal Social Security Statement provides you with current estimates of the survivor benefits that your Social Security taxes have earned for your family. These estimates also need to be a factor in your life insurance planning. Additionally, ensure your family understands that there may be special Military Service Credits available when they apply for any Social Security Survivor benefits and that they will need a copy of your DD214 when they apply.

Personal Life Insurance will still need to be an important part of your Survivor Plan. Remember that 120 days after you retire, your SGLI will terminate for you, your spouse, and your children. You have the option of converting over to VGLI during that 120-day window with no proof of insurability or physical exam required. However, for the healthy retiree, VGLI is a very expensive option. Shop around. Use Navy Mutual as a benchmark to compare rates. Navy Mutual’s level term insurance costs several thousands of dollars less than VGLI . If you begin a second career, your new employer will most likely provide you with an Employer Group Life Insurance Plan. The coverage is often a multiple of your salary, commonly twice your annual salary. However, this is only a group plan and will normally terminate when you leave their employ. Some plans may have an option to be converted to individual insurance typically at a higher premium. Note that many retirees do not stay with that first employer after retiring. Many retirees change employers several times. Group plans can vary and some may have underwriting requirements. Because of its very temporary nature, you may want to consider an employer’s group plan to be a “bonus” to your overall plan.

Most retirees will find that they still require private, individual life insurance. Many experts recommend a mix of both permanent (whole life) and term coverage. A life insurance tutorial is available on Navy Mutual’s website (www.navymutual.org) to help you understand the differences between and the advantages of both. Additionally, Counselors can discuss your options with you. Also available on the website is a Life Insurance Needs Analysis Calculator to help you determine your needs. As you transition, there are often changes in your life that can increase your need for additional coverage. A new home; increased income and attendant increase in lifestyle; and approaching college costs can all increase your family protection needs. Additionally, do not neglect the need for spouse coverage. During that same 120-day window following retirement, you have the option to convert your spouse's SGLI coverage over to whole life. This should be seriously considered if your spouse has health issues such that render him/her medically insurable or unable to find coverage at reasonable rates due to these health issues. Call the Office of SGLI (800-419-1473) to find out more about this option.

Life Insurance Planning is not easy. Most people spend more time researching and buying a new car than they spend putting a good plan in place for the financial security of their survivors and most families are woefully underinsured. Below are some common life insurance mistakes to look out for. Call one of Navy Mutual’s Counselors or another life insurance professional to learn more about avoiding these mistakes.

 1. Naming your estate as beneficiary
 2. Failing to name contingent beneficiaries and failing to keep beneficiaries up to date
 3. Failing to review you coverage periodically to ensure that it adequately addresses the changes in your  life.
 4. Failing to buy the right type of life insurance (Term and Permanent insurance can both have a place  in your plan).
 5. Not having enough insurance (Use Navy Mutual’s’s Needs-Based Calculator).
 6. Making policies payable outright to minor children/grandchildren.
 7. Forgetting the termination date of your Term plan.
 8. Buying insurance as a commodity. Seek the help of a knowledgeable life insurance professional.  Navy Mutual’s Counselors can help you determine what is best for your family.

Property and Casualty Coverage. This is the one area...