Assessing Your Life Insurance Needs

Disclosure: This article is sponsored by Navy Mutual. Changes in your life affect your life insurance needs going forward. Servicemembers’ Group Life Insurance (SGLI) might be more than sufficient when you’re young and single. But as you start your family and take on new obligations, your needs change. So, how can you choose the insurance that…
Advertising Disclosure.

Advertiser Disclosure: Opinions, reviews, analyses & recommendations are the author’s alone. This article may contain links from our advertisers. For more information, please see our Advertising Policy.

The Military Wallet has partnered with CardRatings for our coverage of credit card products. The Military Wallet and CardRatings may receive a commission from card issuers. Some or all of the card offers that appear on The Military Wallet are from advertisers. Compensation may impact how and where card products appear, but does not affect our editors’ opinions or evaluations. The Military Wallet does not include all card companies or all available card offers.

Disclosure: This article is sponsored by Navy Mutual.

Navy Mutual Logo

Changes in your life affect your life insurance needs going forward. Servicemembers’ Group Life Insurance (SGLI) might be more than sufficient when you’re young and single. But as you start your family and take on new obligations, your needs change.

So, how can you choose the insurance that meets your current needs and figure out when it is time to make a change?

When to Reassess Your Life Insurance Needs

First, let’s take a look at when it might be time to update your coverage.

In general, it is a good idea to review your needs and coverage at least annually. This ensures that any life events (children, home purchase, or new financial obligation) are accounted for in your future coverage. Developing a habit of annually reviewing the “terms” of your home, auto, life, and disability insurance coverage can prevent leaving anything to chance.

Set aside some time specifically to evaluate how your life insurance needs have changed after any major life events.

Growing Family, Growing Needs

The most important events to account for are marriage and parenthood. There is nothing more meaningful than growing your family. As painful as it is to think about, it is important to make sure that your family will be taken care of if anything were to happen to you or your spouse. That means purchasing an amount of life insurance that not only matches your family’s minimum needs today, but considers the loss of income, the loss of future income, or providing for childcare. Each new family member will add needs that will have to be met by your life insurance policy.

That said, a growing family is not the only reason to reevaluate your life insurance coverage. Other life events that merit examining your coverage include buying a house, transitioning out of the military, and retiring. For example, term life insurance may have been the right choice to supplement SGLI while you were deploying, but you may want to transition to a permanent life insurance policy as a long term estate planning solution when you leave the military.

Determining Your Needs as Your Family Grows

There are many ways to determine your current life insurance needs. Some of the most popular methods include:

  • Income Multiple: rough calculation to offset some number of years of future economic benefit, such as multiplying your current salary by ten
  • Human Life Value: the present value of the insured’s after-tax future expected income
  • Needs Approach: offsetting current or planned debts the beneficiary could not or would not be able to handle on their own – typically this involves a mortgage balance, present value of future education expenses for children, 1 or more new auto purchases, and a lump sum for the survivor’s ancillary expenses

At Navy Mutual, we find that the Needs Approach is the most helpful for our Members. It allows you to choose the coverage that will protect the ones you love without paying for coverage that they do not need.

The basic calculation to determine the right amount of coverage through the Needs Approach is as follows:

Financial Obligations – Non-Retirement Assets = Necessary Coverage

First, add up all outstanding financial obligations including mortgage payments, tuition for your children, and living expenses for your family. Next, subtract the value of your assets, include only assets that will be available for liquidation should you pass. The resulting number is the amount of money that would take care of your family’s needs if anything happened to you.

The all-encompassing Needs Approach may seem complex, but Navy Mutual’s free and easy-to-use Basic Life Insurance Needs Calculator will painlessly guide you through the process. Once you have determined your preferred needs assessment method, our team of experienced sales representatives will help you tailor the policy design that is right for you; schedule an appointment today.

About Post Author

Get Instant Access
FREE Weekly Updates! Enter your information to join our mailing list.

Posted In:

Reader Interactions

Leave A Comment:


About the comments on this site:

These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

The Military Wallet is a property of Three Creeks Media. Neither The Military Wallet nor Three Creeks Media are associated with or endorsed by the U.S. Departments of Defense or Veterans Affairs. The content on The Military Wallet is produced by Three Creeks Media, its partners, affiliates and contractors, any opinions or statements on The Military Wallet should not be attributed to the Dept. of Veterans Affairs, the Dept. of Defense or any governmental entity. If you have questions about Veteran programs offered through or by the Dept. of Veterans Affairs, please visit their website at The content offered on The Military Wallet is for general informational purposes only and may not be relevant to any consumer’s specific situation, this content should not be construed as legal or financial advice. If you have questions of a specific nature consider consulting a financial professional, accountant or attorney to discuss. References to third-party products, rates and offers may change without notice.

Advertising Notice: The Military Wallet and Three Creeks Media, its parent and affiliate companies, may receive compensation through advertising placements on The Military Wallet; For any rankings or lists on this site, The Military Wallet may receive compensation from the companies being ranked and this compensation may affect how, where and in what order products and companies appear in the rankings and lists. If a ranking or list has a company noted to be a “partner” the indicated company is a corporate affiliate of The Military Wallet. No tables, rankings or lists are fully comprehensive and do not include all companies or available products.

Editorial Disclosure: Editorial content on The Military Wallet may include opinions. Any opinions are those of the author alone, and not those of an advertiser to the site nor of  The Military Wallet.