Is Your Family Protected from a Loss of Income?

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Can your family continue living with their current quality of life if the primary breadwinner were suddenly unable to earn income? If you are in a two-income family, would your family be able to survive on one income?

These are difficult questions to ask. But it is the reality thousands of families face each year. Most people would struggle if they lost their job or were unable to work. Thankfully, there are a few ways you can prepare for a loss of income.

Assess Your Risk

The first step is to assess your risk level. What happens if you or your spouse lose your job or you are unable to work? Would the remaining income and your savings be enough to get by? If not, how much would you need to bridge the gap?

Keep in mind, you may be eligible for unemployment benefits if you lose your job. This often won't be enough to support your previous lifestyle, but it may be enough (when combined with your savings) to get by until you can land on your feet and find a new job.

Being unable to work due to an injury or illness could be more challenging to bounce back from, especially for a long-term condition. Supplemental income could come from VA service-connected disability compensation, Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) from the Social Security Administration. But these programs can take months to be approved and may not provide enough money to make up for lost work.

Finally, what would happen if you or your spouse were to die? Do you have enough life insurance to provide for your survivors?

Take some time to think about these situations. If the answer is uncomfortable, then it's a good idea to look into buying a life insurance policy or a disability insurance policy.

Let's examine this further.

Most People Don't Have Enough Coverage to Protect from a Loss of Income

We can't know if an unexpected loss of income will impact our family. But you can protect yourself and your family from an unexpected loss of income by having the right insurance policies in the right amounts.

Even though many people may have insurance, they may not have enough.

According to national life insurance statistics:

  • Only 54% of Americans own life insurance (while 1 in 3 families don't have any life insurance coverage)
  • Less than 20% of Americans own disability insurance.

Let's take a look at these in more detail.

Life Insurance Protects You From the Worst-Case Scenario

Life insurance is one of the most valuable insurance policies you can purchase. And depending on your current age and health, it may be much more affordable than you think.

If you are in the military, you can buy up to a $400,000 Servicemembers’ Group Life Insurance Group (SGLI) policy. SGLI is an affordable group life insurance policy, but it has two flaws: It may not offer enough coverage for you and your family, and you cannot take it with you when you leave military service.

Likewise, Family SGLI (FSGLI) only provides up to $100,000 in coverage and features the same two flaws -- it often isn't enough coverage for most families, and you lose access to it when you leave the military.

Having a life insurance policy that is separate from your job is more important than most people think. We can't always predict how long we will be able to stay with our current employer.

It's a good idea to look into a separate term life insurance policy you can obtain through another company. This will give you access to an affordable life insurance policy that you can keep long after you leave military service or after you leave your civilian job.

How Much Life Insurance Do You Need?

There are several rules of thumb you can use to determine how much life insurance you should buy. In general, you want to ensure that you will have enough money to cover your end of life expenses, pay off any outstanding debt and provide enough money to cover living expenses, child care and related costs such as education.

You will need to spend some time reviewing your budget and current expenses to get a good idea of how much life insurance you need. The number is probably higher than you think and almost certainly higher than you can obtain through SGLI or FSGLI.

Disability Insurance Can Protect Your Income

According to the Social Security Administration, studies show that a 20-year-old worker has a 1-in-4 chance of becoming disabled before reaching full retirement age. Thankfully, many of these situations are not permanent disabilities. But that doesn't mean everyone is prepared to handle these situations when they arise.

Most people either don't have disability insurance, or they don't have enough. If you are serving in the military, you may think disability insurance isn't necessary. If you are injured on military duty, you can often retain your full pay and benefits while recovering. However, there can be situations when an injury or illness is severe enough that you could be medically separated or medically retired.

Depending on your situation, a military medical separation or retirement could result in a significantly lower amount of income than you would have had if you would have continued serving on active duty or if you would have earned military retirement pay.

And depending on the underlying medical condition, you may have trouble working a full-time position after your diagnosis, decreasing your long-term earning potential.

Again, you may be eligible for certain financial benefits such as VA disability compensation or SSDI or SSI through the Social Security Administration. But approvals can take months and may not replace your lost income.

It's a good idea to research disability insurance policies to see if they fit your overall financial plan. Be sure to educate yourself on how disability insurance policies work.


It's never fun to think about what could happen if you were to become seriously ill or injured, or worse, what would happen if you or your spouse were to die. But it's essential to understand the potential outcomes if either of these situations were to occur. Simply put, many families would suffer severe financial difficulties. Thankfully, these situations can be more straightforward if you have the right insurance policies in place.

SGLI and VGLI May Not Be Enough

SGLI and VGLI may not be enough to cover your family's needs. Explore life insurance options with our free tool, which compares rates and matches you to the coverage your family needs.

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Whether you're trying to balance your budget, build up your credit, select a good life insurance program or are gearing up for a home purchase, has you covered. Subscribe to and get the latest military benefit updates and tips delivered straight to your inbox.

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