Military Personal Finance Flowchart

[christianpessimist]

@devnull Don't forget the death gratuity too.

 

[theeyeofaneedle]

@abidingpatri0t For the folks stationed in very high cost of living areas it would not pay off the family house

In San Diego county there are roughly 50k folks stationed here with houses averaging over 550k

It would be fine for people in most dumpy Air Force and Army base locations

 

[abidingpatri0t]

@theeyeofaneedle I'm not sure the point of life insurance is to pay off your house. Also, what if you rent? What if the living spouse wants to move? Relevant: How much life insurance do you need

 

[theeyeofaneedle]

@abidingpatri0t Some of the SEAL folks I know took out additional policies for this reason

 

[abidingpatri0t]

@theeyeofaneedle Ok yes, granted. A SEAL should probably have more life insurance. But for the vast majority of the military that aren't SEALs... SGLI should probably be enough.

 

[lilfoxkit]

@abidingpatri0t What does being a seal have anything to do with it?

Insurance covers future earnings if lost due to death.

 

[abidingpatri0t]

@lilfoxkit SEALs would presumably have a higher chance of dying while in military service. https://www.businessinsider.com/the...ities-since-2015-have-been-special-ops-2017-5

Therefore, it would make sense for them to have larger life insurance policies to cover the additional risks.

 

[lilfoxkit]

@abidingpatri0t Cool, you linked an article that shows spec ops peeps die in combat more often...

*** You're missing the point of life insurance.

Life insurance, whether insuring at SGLI maximums, less than that or another additional policy on top of, isn't bought based on whether or not you think you are going to die or are at greater risk. It's about your income stream and what (more importantly WHO) that stream provides for.

When young, you have very few things negatively effected if you would die. No wife, no mortgage, no kid's college.

You could be a young seal or young yeoman it doesn't matter. You don't need much life insurance. If any!

Now older you, with the wife, with kids, with the house, with college... you need that life insurance to cover those expenses if you die.

 

[abidingpatri0t]

@lilfoxkit If that's your plan, great! I'm creating this graphic for young servicemembers. In general, SGLI is enough. They don't need to seek out additional life insurance. This is where many young servicemembers fall into whole life insurance traps and other financial products that are less than suitable for their situation.

Perhaps when they get married or have children they can reevaluate, but for starting now, SGLI should be enough in >90% of cases.

 

[resjudicata]

@lilfoxkit I think insurance is about risk mitigation. Someone with a higher likelihood of dying should probably have more insurance. Similar to car insurance, you set your policy based on the amount of risk you want to mitigate. If I feel like I'm in a safe job, then less insurance payout means less of a premium I have to pay. If I risked dying every time I was deployed, yeah maybe I'd rather pay a higher premium.

 

[cbc8171]

@abidingpatri0t I've seen a lot situations where it's advisable for people to have more than $400k. I'm at lunch and can't post much now, but I'm also in the camp that term policies should be looked at for anyone that isn't unmarried and childfree. Not always necessary, but should be considered.

 

[abidingpatri0t]

@cbc8171 Thanks dipsis, I will add a caveat for investigating term life insurance if married or adding kids.

 

[imperfection91]

@abidingpatri0t SDP is 10% APR compounded monthly, not 10% monthly.

 

[promotor_fidei]

@imperfection91 It’s actually compounded quarterly. So with 10k, you’ll get 250 bucks every quarter

 

[imperfection91]

@promotor_fidei Fair enough, that math checks out. Thanks for the correction. The way the flowchart is worded makes it sound like it pays 1000/mo which we know it doesn’t.

 

[abidingpatri0t]

@imperfection91 Ok good points. Would better wording be: "Savings Deposit Program (SDP) - maximum contribution of $10k. Pays 10% annually. Great place for emergency fund." ?