Transcript - The Money Drill: Why You Should Get Covered Before You Lose Your Military Life Insurance JJ: Hi. This is The Money Drill, and I'm JJ Montanaro. With the help of some great guests, I'll help you find your way through what sometimes can be a money minefield. We make money matters understandable so you can command your own financial future. Welcome to The Money Drill. Today, we're talking about life insurance. We're gonna go behind the curtain and talk to a product manager here at USAA, somebody who's responsible for developing USAA's life insurance products and the special features we have for our military members. With me today is Kenny Sutton of USAA's product management team. All right, Kenny, welcome to the show today. In your particular case, I really want you to tell us how you got there because you didn't take the most direct route to being a product manager here at USAA. Kenny: No, I sure didn't. JJ: So talk a little bit about your military service, and tie that back into life insurance because I thought that was a pretty interesting story as we were getting ready to talk today. Kenny: Yeah, I'm an Air Force veteran. I was in for... JJ: And we're not gonna hold that against you. Kenny: Sure, okay. That's good. Excellent. I was an Air Force veteran, but I spent my entire career working for the Army, so I was a little more green than blue. JJ: Okay. Now my heart's starting to pitter-patter a little bit. Kenny: All right. There you go. How's that? That's good? And I was a combat weatherman in the Air Force, and I spent a lot of my time deployed. And much of my career after 2001, obviously, was spent downrange between Iraq and Afghanistan. After about 12 years of service, not only did the physical injuries start piling up, but I also started experiencing some of the mental fatigue that happens from just the constant, what we call the operations Transcript - The Money Drill: Why You Should Get Covered Before You Lose Your Military Life Insurance 11
cadence. It was pretty brutal. Started falling apart a little bit and ultimately was medically retired from the military for both the physical injuries that I sustained in Afghanistan and also due to some of the issues that later became diagnosed with PTSD, that came up with. So, medically retired from the military. And little did I know that those diagnoses were what would ultimately make me uninsurable, meaning that I could not buy life insurance based on my health. And the great irony, of course, is that I go to work here at USAA Life Insurance Company selling that which I could not own, so it was kind of an interesting change of pace. JJ: But that's carrying, and not in a bad way, but carrying some baggage that I think really had a positive impact as you follow the story through. Kenny: From a military perspective, when you look at your career, leaving the military, losing your SGLI, that's about the only thing that's guaranteed. You're not necessarily gonna pass away, you're not necessarily gonna get hurt, but you will lose the military's SGLI benefit at some point. JJ: Everybody's gonna leave the military. Kenny: That's right. That's right. That's exactly right. JJ: All right, so you're 23. You're healthy. You get an insurance policy. Come back 15 years later, and you're separating from the military. You need insurance, but you're not really in the same condition you were back when you were 23, which is pretty obvious, but you get the same underwriting criteria, the same premium type of approach. Kenny: You get credit for the good health that you were in at age 23. Again, you're 100% likely to leave the military. You will lose your SGLI at some point, and we wanna be able to provide you options, so you have to meet us halfway. We make it very easy for our servicemembers to buy life insurance. You would go through a normal underwriting process unless you're within 90 days of deploying. If you are, we assume that if you're healthy enough to deploy, you're healthy enough for life insurance, so we waive the physical requirements, and we issue the policy at a healthy rate. You know what it comes down to? A lot of us, and what my perspective of when I was in active duty, is that, one, I had life insurance through the military, and if it was given to me by the military, it must be good, right? And it is, generally speaking. I figured it was enough. JJ: We're talking Servicemembers' Group Life Insurance, SGLI. Kenny: Absolutely. I thought that was more than enough, and in most cases, I was probably right. What I hadn't factored in was that at some point my military career would end and that SGLI would end with it. And even as much value as I saw in it, I didn't really put anything in place to make sure that I had that benefit no matter what, whether I was in the military serving or not. And I didn't realize that that ability to serve wouldn't necessarily be within my control. I thought I would get a choice of when I got to leave and that it'd be after a long and very productive 20 or 30-year military career, right? And so I hadn't really planned for that. Transcript - The Money Drill: Why You Should Get Covered Before You Lose Your Military Life Insurance 21
And so when I was talking to our military members on the phones after I joined here at USAA, I found that just by simply talking to them about what their future plans were and understanding that we can kinda highlight some of these risks, that it's not necessarily the risk of dying that's one of the more common risks. It can be other things, and that we can get this stuff in place, and that they can provide them and their families a great deal of peace of mind by having it done, something that they own and they control. JJ: So let's step back. So SGLI, most folks are familiar with that, the Servicemembers' Group Life Insurance up to $400,000 coverage. We talked a little bit about transitioning out. And so, when you get to that point in time, you do have the opportunity to get Veterans' Group Life Insurance, VGLI. So talk a little bit about that. Kenny: Yeah. Well, before I talk about VGLI, I'd like to say that SGLI, without a doubt, is the best thing for our servicemembers, and we never want our servicemembers who have access to SGLI to come away with a message that they should get rid of it in place of something else. JJ: Great point. Kenny: It is very, very inexpensive. It's great coverage. It's one of the best group life insurance policies of any company. It just happens to be the DOD, right? So it's a really, really good policy. You wanna keep that in force. So anything we talk about would be in supplement to that. A potential shortfall of SGLI, as good as it is, is that it doesn't go with you when your military career ends. Just like all group life insurance that's linked to your career, when your career ends, that life insurance, generally speaking, you can't take with you. The military has the exception with the Veterans' Group Life Insurance. And it's a great policy in the sense that it's guaranteed to the veteran regardless of any kind of health issues or anything else. One of the drawbacks to Veterans' Group Life Insurance is that most servicemembers don't realize that as they age, the price automatically increases, so every fifth birthday the price goes up significantly. And more often than not, what we found is that at some point the servicemembers or the veterans that have Veterans' Group Life Insurance just can't afford it anymore. JJ: Yeah. I mean, you can go Google VGLI tables, and it'll take you to the VA website, and you can look at the rates and see that progression. And I can't remember the exact numbers, but I think at age 60, what was like $40 is now $432, and it gets astronomically higher after that. Kenny: That's right. That's exactly right. JJ: I like what you said about the guaranteed insurability. So as long as you get that coverage with 240 days of separation, then no matter what is going on, if you have a situation like you did where you have some health issues, you can still get the coverage. But, again, understanding that it's not going to be that same amount for the rest of your life. Kenny: It will go up in price as you age, and that is a huge factor that you have to understand, Transcript - The Money Drill: Why You Should Get Covered Before You Lose Your Military Life Insurance 31
and you have to weigh the consequences of that. JJ: So let's go back to product management in terms of what... You had the experience, and I think you were actually involved in terms of some of the neat stuff USAA has done in terms of our offerings for military members. So let's talk about some of the things that we do that we think are unique and how that can help military members. Kenny: So we have quite a few incredible one-of-a-kind features here at USAA that are very unique, and they are very centric to our military members. Throughout the 2000s, we started to see trends of our servicemembers who were separating from the military or retiring from the military or even those that were serving. And they were calling us up and wanting life insurance. And as we completed medical underwritings required to get a typical policy, we started noticing quite a few trends that was making it very difficult for some of these servicemembers, like myself, to buy life insurance and/or to buy it at relatively inexpensive price. And so with our focus on the military member, we decided to design a few products that were really meant for the military servicemember, several of which are something that just about every military member can use, as long as they own a life insurance policy with us. Once again, that's in supplement to what they have with the SGLI while they're serving. JJ: One of the things... So the whole package, as you put it together, is Military Protection Plus? Kenny: That's right. That's right. It's called Military Protection Plus. JJ: Now, what happens, relative to the conversation we're having, once you separate? Because I think that's one of the neat features that's part of that package. Kenny: Absolutely. So that was the big thing that we noticed, that servicemembers were losing their SGLI, and then they were finally realizing the increasing cost of the Veterans' Group Life Insurance. And so they would call us up and ask for something that had a level price over 10, 20, or even 30 years. And so what we decided to do is that if they buy a life insurance policy with us while they're on active duty, they get this thing called Military Future Insurability Rider. It's just really a fancy name for, we let you get more life insurance with us when you separate or retire regardless of the condition. So if it's a medical separation, a medical retirement, or just a voluntary separation or retirement, we let you get up to $400,000 of additional life insurance with us without having to answer any medical questions. You get to do that at the same risk class, meaning your same health that you bought the original policy at, and that's really huge. A lot of our servicemembers don't quite understand what they can actually mean from a price perspective. It can literally save tens of thousands of dollars over 10 or 20 or 30 years relative to the VGLI increasing cost. It's a tremendous benefit, and it's guaranteed. Very, very convenient for our servicemembers. Transcript - The Money Drill: Why You Should Get Covered Before You Lose Your Military Life Insurance 41
JJ: What else do we have in terms of military specific offerings that we do here at USAA with our life insurance? Kenny: One other tremendous benefit, and that's for that 23-year-old. Sometimes a 23-yearold... When I was young, I didn't see a huge amount of value in buying additional life insurance. One, because I was indestructible, and, two, my family was young, and I felt the SGLI could cover me. But what I hadn't considered is the cost of those injuries. And the military does great at taking care of our servicemembers with financial help when they become injured, but USAA wants to be there as well. So we have also added something called the Military Severe Injury Benefit Rider. And what that means is that if you suffer certain traumatic injuries while you're on active duty, guard or reserve, we'll cut you a check for $25,000 to help you get on your feet financially while you get back on your feet physically. And that money comes really quickly. You don't have to wait the months and months and months that sometimes it takes to get the TSGLI benefit from the military. We get that to you right away so your family can fly. You can have a cash reserve right there, readily available. And that traumatic injury benefit plus the Future Insurability Rider are both added free of charge to a life insurance policy, and you don't pay any more than any other person would as a servicemember. So you just buy a life policy, and you get those two benefits. JJ: Is there something you have to do? Do you have to...i mean, in order to qualify for those benefits, do you need to tell USAA? Is that part of the application? How does that work? Kenny: We automatically add it. So we know that you're serving, and we're very good at knowing what it is that you do, and we automatically add those benefits when you buy a life insurance policy with us. As long as you are on active duty, you're a guardsman or you're a reservist, we'll add those right to the policy, and you don't even have to think about it. They're on there. And worst case scenario, if something happens, whether you get injured or if you are killed, we'll take care of your family, we'll take care of you. And when you do leave the military and lose that SGLI, you call us up, and we add the additional life insurance just by, basically, say, "Here it is. When do you want it to start?" It's just that easy. JJ: You'll pay for that insurance, but you'll pay at whatever age you are, but it'll be based on your health back when you first took out a policy. Kenny: That's exactly right. It's a significant savings, and, most importantly, you don't have to worry about proving that you're still healthy. That's the most important facet. JJ: Any final thoughts, Kenny, in terms of what you'd like folks to hear? Kenny: Sure, and one other benefit that we just recently added is that our military spouses, if they have a life insurance policy with us, we know. We realize that they will also lose their family SGLI when their servicemember spouse leaves the military. So we've added a similar benefit that if they have a small policy with us and their spouse gets out of the military or they lose their family SGLI for another reason, such as divorce, something like that, then we will let them increase their life insurance with us to the same amount of life insurance they lost with Transcript - The Money Drill: Why You Should Get Covered Before You Lose Your Military Life Insurance 51
the family SGLI. So it's also an incredible benefit that we want to add and make sure that our spouses are included in this really, really important life insurance conversation. JJ: Well, Kenny, thanks so much for being here today. I appreciate all your insights. It's exciting to hear, one, your story, how you've been able to turn your military service into some really good things for our members in terms of unique Military Protection Plus Riders on insurance policies that they have. And really, to highlight the need for our military members to take a look at life insurance, recognize that, hey, life as it is now may not be the same way it is years from now. And life insurance can be a great way or getting that life insurance while you can, may be a very important decision to make. Kenny: Yeah. Thank you, JJ. Appreciate the opportunity. JJ: For more information, folks can visit usaa.com/lifeinsurance, and, of course, give us a call. Talk to one of our advisors, and they can walk you right through it at any point in time. Thanks for listening. This is The Money Drill with JJ Montanaro. For more great advice, check out usaastories.com. Transcript - The Money Drill: Why You Should Get Covered Before You Lose Your Military Life Insurance 61