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Why mixing term and whole life insurance is smart

Always ready, always covered.
Jessica Evans Avatar
Photo by Elizabeth Gerhart

Insurance isn’t just another line item in your military readiness checklist — it’s a critical asset that safeguards your family’s future and its importance can’t be overstated. It’s not a question of whether you need it, but rather how you can tailor different types of coverage to suit your unique life journey.

Life insurance is one of the most important financial decisions you can make. It reassures your loved ones they will have financial support to continue their lives, pursue their dreams and feel secure, even in your absence.

Understanding coverage

There’s a big difference between term and whole life insurance. Both have their place in your life as an active duty service member. Term life insurance provides coverage for a specific period (or term). But once that term expires, so does the insurance.

Whole life insurance, on the other hand, provides lifelong coverage and includes a benefit known as cash value. This cash value grows at a guaranteed rate over time every time you pay your premium. So why do you need both? 

Coverage flexibility

Maintaining both term life insurance and whole life insurance when you’re on Active Duty means you’ll have nearly every situation covered. Term life insurance, such as SGLI (Servicemembers’ Group Life Insurance), provides immediate protection while you’re on Active Duty. But while life goes on after you stop wearing a uniform, SGLI does not. This is where whole life insurance steps in!

It’s a good idea to supplement your SGLI while you’re in service for several reasons. First, your family might have increased coverage needs. SGLI only provides a maximum of $500,000 — that might sound like a lot now but what about when your family grows? Additional coverage helps ensure your family is better protected.

Private policies often require health assessments. So, obtaining one while you’re still hitting rock-star PT test scores is ideal. It’ll be harder or maybe more costly later on in life. 

Think of it like building a house — term insurance provides the scaffolding during construction (your military service) and whole life insurance forms the solid structure that endures for years to come.

Transitioning to civilian life

Exiting the military brings a wave of changes, including the expiration of your SGLI coverage. Without a plan in place, this transition can leave your family vulnerable. However, a supplemental term policy along with whole life insurance offers continuity, ensuring ongoing protection as you navigate civilian life. It’s a safety net that remains steadfast during periods of uncertainty.

Asset protection and wealth transfer

Life insurance isn’t just about protecting your loved ones — it’s also a valuable tool for building wealth and protecting your assets. Whole life insurance policies offer benefits such as cash value accumulation and potential tax advantages. It’s a way to invest in your future by safeguarding your family’s financial security. Plus, you can use the cash value for various purposes, such as supplementing retirement income or funding education expenses. 

Locking in insurability

Military service comes with risks that could affect your insurability later in life. By securing whole life insurance coverage while you’re in good health, you can lock in your insurability and ensure access to coverage regardless of future health changes. Compare it to locking in a low interest rate on a mortgage. You’re securing your financial future while you can.

Comprehensive financial planning

Life insurance is just one piece of the puzzle when it comes to your financial plan. Having a combination of term and whole life insurance as part of a comprehensive strategy allows you to address short-term needs while building a foundation for long-term financial security. It’s a roadmap for your finances — you know where you’re going and how you’re going to get there. Most importantly, it gives you peace of mind knowing your loved ones are protected in various scenarios, whether during active duty or making a transition to civilian life or retirement.

Integrating life insurance into your financial planning is a strategic move toward achieving your family’s aspirations. Whether it’s ensuring your children’s education, providing for your spouse’s retirement, or passing on a legacy to your next generation, life insurance is an essential step in crafting a financial safety net that encompasses not just the practicalities of day-to-day living but also the dreams and goals that define your family’s future.

AAFMAA has a variety of products available exclusively for the military community, making it an excellent choice for those looking to enhance their insurance coverage and financial readiness.

Jessica Evans Avatar

Jessica Evans

Senior Writter

Jessica Evans has more than a decade of content writing experience and a heart for military stories. Her work focuses on unearthing long-forgotten stories and illuminating unsung heroes. She is a member of the Editorial Freelance Association and volunteers her time with Veterans Writing Project, where she mentors military-connected writers.