One thing almost everybody knows about the military is that there are great financial benefits. Unfortunately, it can be hard to get the details because most military service members and spouses are more eager to tell you what worked for them, not having much experience with the other options. Here’s a brief rundown of all the insurance options available.
For spouses and families, the military offers Tricare insurance. It comes in two flavors, Tricare Prime and Tricare standard.
Tricare Prime is free of all cost to the family members, but requires that all medical care be provided at military facilities. This means you will have a military doctor, you will receive health care at military hospitals, and prescriptions from military pharmacies. You will receive dental and optical care at military facilities as well.
Tricare Standard is a more, well, standard health insurance. In fact, it’s just like standard health insurance. They have a network of providers in most areas of the country, and a co-pay system. In Tricare Standard, you are not only permitted to see civilian medical providers, you cannot use military facilities at all.
Tricare Prime enables you to use military dental clinics. If you elect Tricare Standard, however, you will also receive dental coverage through Metlife. The only big thing to remember is that Metlife is a second insurance carrier and you will have to work through THEIR network and THEIR bureaucracy for your dental care.
LIFE INSURANCE AND DEATH BENEFITS
A topic that many people are afraid to discuss is life insurance. Nobody likes the thought of losing their loved one–a chance all that much more likely in the military. But for families especially, insurance is supposed to give them what they need for a new start in the event of a member’s death. It’s critical that you and your service member both have life insurance, and that you talk about the other death benefits that come from the military.
A good rule of thumb for life insurance is that it must cover at least the debts of the family, plus a little extra. That way, in the event of the death, a spouse with perhaps limited earning potential (due to a family, maybe) will not ultimately be liable for house, car, education, or other loans, and will have enough money to travel somewhere (usually home) to restart their life.
Service member’s Group Life Insurance (SGLI) is the life insurance offered to your service member at a reduced rate. He/she can elect up to $400,000 of coverage, the fee for which will be taken directly from his/her paycheck. The premiums are about a third of what civilian insurance costs, so it’s a very good deal.
This money is paid to the BENEFICIARY upon death of the service member. Check to make sure the beneficiary is not the service member’s parents or siblings! Many times they fill it out in basic training and never touch it again, and don’t think to do it after marriage. They can change it easily through their administration (S-1 or N-1) departments.
While service members may elect less than $400,000 in coverage, you and your spouse should discuss what your life insurance needs really are. There are inexpensive ways to get additional life insurance (see below).
Spouse Election is a subset of SGLI that provides up to S100,000 of life insurance for the spouse of a service member, again at a reduced premium. This is also a very good deal, and is necessary for most families.
Civilian Life Insurance is a good option if you need extra life insurance. Given the price of real estate and the amount of student loans, $400,000 for the service member and $500,000 for both may not be sufficient. Most military bases offer free financial advice, and their advisors can help you add on what you need. Beware, however: the financial advisors connected to insurance providers will always try to convince you that you must have more insurance than necessary. Always trust an independent financial advisor over one that comes from a financial institution.
Death Gratuity is a an amount paid out to a designated beneficiary upon the death of a service member to cover final disposition of the body, funeral expenses, and burial. It is $100,000. Legally, it is paid out to the beneficiary only, which means that if your service member still has his father as the beneficiary, then his father will receive the money and be responsible for funeral arrangements. It’s important that you discuss with your service member your plans and desires for such an event, and adjust beneficiaries as required.
Pay Arrears refers to the money owed by the government to the service member at the time of his/her death (usually part of a paycheck). This will be paid to a specific beneficiary as well.
Wills are vital to service members and their families. Your service member will be required to make or update his/her will before each deployment, and you should make sure it applies to you too–especially if you have children. Let the legal office explain all ramifications if one or the other of you dies, but make sure you get it done. Also, don’t forget to discuss the Executor of the will, because that person will have the authority and responsibility of handling all property and investments. It should be someone you both trust to do it correctly, and someone you trust to spend the time to do it right–generally, if one of you is left alive, it should be that person; if both of you are dead, it should be a trusted family member.
There is no specific military discount program for vehicle and property insurance. But many insurance companies offer military discounts, and several (USAA and Navy Federal Credit Union, to name two) exist primarily or only to serve military members and often offer better premiums than civilian competitors.
If you ask for advice, you are liable to get a bunch of people saying, “do this!” and “don’t do that!” The best way to figure out how to handle your finances is to cut through the advice and ask people if they’re satisfied with their bank and insurance provider. Most people will tell you the truth–and most work with military-specific institutions. But that is not a guarantee. Service specific credit unions sometimes have bad reputations.