Life insurance is a cornerstone of financial planning, particularly for military families who face unique challenges such as deployments, relocations, and the ever-present risk of loss during service. First Command Financial Services offers First Command Whole Life Insurance.
It is designed specifically for service members and veterans, providing lifelong protection and a savings component. This article explores what First Command Whole Life Insurance is, its features, benefits, considerations, and how it fits into the financial lives of military families.
Table of Contents
The History of First Command Financial Services
First Command Financial Services was founded in 1958. It has spent over six decades helping military families achieve financial security. The company was founded on the understanding that service members face distinct financial challenges, including frequent moves and unpredictable schedules. Many of First Command’s advisors are military veterans, which allows them to connect with clients on a personal level and tailor solutions to their needs.
First Command partners with select insurers to offer whole life insurance policies that align with the unique circumstances of military life. Their focus on personalized financial planning has made them a trusted name in the military community.
Why Military Families Choose Whole Life Insurance
Military families often face financial uncertainties that civilians may not encounter. Deployments can disrupt income, relocations can increase expenses, and the risk of injury or death during service is a constant concern. Whole life insurance addresses these challenges by offering:
- Lifelong Coverage: Your family is protected no matter when you pass away, as long as premiums are paid.
- Fixed Premiums: Premiums stay the same, making budgeting easier despite military life’s unpredictability.
- Cash Value Growth: The savings component grows tax-deferred, providing a resource for emergencies, education, or retirement.
According to First Command’s 13th annual life insurance survey, 51% of middle-class military families (commissioned officers and senior NCOs with household incomes of at least $50,000) own whole life insurance, a record high.
Additionally, 74% own some form of permanent life insurance, compared to just 42% of civilian families. This shows a strong preference among military families for the stability and long-term benefits of whole life insurance.
| Statistic | Military Families | Civilian Families |
| Own Whole Life Insurance | 51% | 30% |
| Own Any Permanent Life Insurance | 74% | 42% |
| Likely to Consider Permanent Life Insurance (Non-Owners) | 52% | 45% |
Features of First Command Whole Life Insurance
First Command’s whole life insurance policies are tailored to meet the needs of military families. Here are the key features:
- Lifelong Coverage: The policy remains active for your entire life, ensuring your beneficiaries receive a death benefit upon your passing.
- Fixed Premiums: Premiums don’t increase over time, providing predictability for long-term financial planning.
- Cash Value Accumulation: A portion of your premiums builds cash value, which grows tax-deferred and can be accessed through loans or withdrawals.
- Dividend Potential: Some policies may pay dividends, which can be used to lower premiums, increase cash value, or be taken as cash.
- Riders and Options: You can customize your policy with riders like accidental death benefits, waiver of premium (if you become disabled), or an Option to Purchase Additional Insurance (OPAI), which lets you buy more coverage at specific ages without a new medical exam.
These features make First Command’s whole life insurance a flexible and reliable option for military families.
Benefits of First Command Whole Life Insurance
Here’s why First Command Whole Life Insurance stands out for service members and veterans:
Financial Security: The death benefit ensures your family can cover expenses like mortgages, education, or daily living costs after you’re gone.
Tax Advantages: The death benefit is typically income-tax free, and the cash value grows tax-deferred, offering tax-efficient wealth building.
Forced Savings: The cash value acts as a savings tool, encouraging you to save without the temptation to spend.
Loan Availability: You can borrow against the cash value at competitive rates, often without selling your investments, and without undergoing a lengthy loan process.
Accessibility: Some policies may not require a medical exam, making them more accessible to individuals with health concerns.
These benefits align with the financial goals of military families, who often prioritize stability and long-term planning.
Comparing Whole Life and Term Life Insurance
To understand if whole life insurance is right for you, it’s helpful to compare it with term life insurance:
| Feature | Whole Life Insurance | Term Life Insurance |
| Coverage Period | Lifelong | Specific term (e.g., 10, 20, 30 years) |
| Premiums | Higher, fixed | Lower, may increase upon renewal |
| Cash Value | Builds cash value | No cash value |
| Best For | Long-term needs, estate planning | Temporary needs (e.g., mortgage, education) |
| Tax Benefits | Tax-deferred cash value, tax-free death benefit | Tax-free death benefit |
Whole life insurance is ideal for military families who want coverage that lasts beyond their active service years and includes a savings component. Term life insurance, on the other hand, is better for temporary needs or those with tighter budgets.
Estate Planning with Whole Life Insurance
Whole life insurance can be a valuable tool for estate planning. The death benefit can cover estate taxes, pay off debts, or provide liquidity to beneficiaries. Since it’s typically received income-free, it’s an efficient way to transfer wealth to your heirs.
For military families, who may face unique estate planning challenges due to frequent moves or the risk of dying in service, whole life insurance provides financial protection for their loved ones. The cash value can also be used during your lifetime for goals like funding a child’s education or supplementing retirement income.
Tax Advantages of Whole Life Insurance
Whole life insurance offers significant tax benefits:
- Tax-Free Death Benefit: Beneficiaries receive the death benefit without owing income tax.
- Tax-Deferred Cash Value Growth: The cash value grows without being taxed until you withdraw it, and withdrawals up to the amount of premiums paid are tax-free.
These advantages are particularly appealing for military personnel, who may face complex tax situations due to deployments or relocations.
Managing Your Whole Life Insurance Policy
Once you have a whole life insurance policy, it’s essential to manage it effectively:
- Review Regularly: Life events, such as marriage, having children, or buying a home, can change your coverage needs. Check your policy periodically to ensure it aligns with your goals.
- Explore Riders: Adding a rider, such as accidental death benefits or a waiver of premium, may enhance your coverage.
- Understand Cash Value: Learn how your cash value grows and how you can use it for loans or withdrawals.
- Avoid Early Cancellation: Canceling the policy early may result in surrender charges, and the cash value might not cover all premiums paid.
First Command advisors can guide you through these steps and help you adjust your policy as needed.
Considerations and Potential Drawbacks
While First Command Whole Life Insurance offers many benefits, there are some considerations to keep in mind:
- Higher Premiums: Whole life insurance is more expensive than term life, which may not fit every budget.
- Complexity: The various features and riders can be confusing, so working with a trusted advisor is essential.
- Surrender Charges: Canceling the policy early may incur fees, and you might not recover all premiums paid.
- Opportunity Cost: The money spent on premiums could be invested elsewhere for higher returns, though with more risk.
Additionally, some online discussions, such as an X post on MilitaryFinance, express concerns about First Command’s whole life insurance. Critics argue that the high fees and commissions make it less cost-effective than term life insurance or low-cost investments, such as the Thrift Savings Plan (TSP) or Vanguard index funds.
For example, a review of the Military Money Manual suggests that First Command’s products may prioritize advisor commissions over client benefits. It’s essential to weigh these perspectives and consult with a financial advisor to ensure the policy aligns with your goals.
How to Get Started with First Command Whole Life Insurance
If you’re interested in First Command Whole Life Insurance, follow these steps:
- Contact a First Command Advisor: Visit First Command’s website to connect with an advisor who specializes in military financial planning.
- Assess Your Needs: Discuss your financial goals, budget, and coverage needs to find the right policy.
- Explore Options: Learn about available riders and customization options to tailor the policy to your situation.
- Apply for Coverage: Provide personal and financial information, and in some cases, undergo a medical exam (though some policies may not require one).
- Review the Policy: Carefully review the terms before signing to ensure you understand the coverage and costs.
First Command’s advisors can provide personalized guidance to help you make an informed decision.
Choosing the Right Life Insurance
When deciding on life insurance, consider these factors:
- Coverage Amount: Calculate how much coverage your family needs based on income, debts, and future expenses.
- Policy Type: Choose between whole life for lifelong coverage or term life for temporary needs.
- Budget: Ensure you can afford the premiums in the long term.
- Riders: Look for additional benefits, such as accidental death or disability waivers.
- Advisor Support: Work with a trusted financial advisor to navigate your options.
Military personnel should also explore government-provided options, such as Servicemembers’ Group Life Insurance (SGLI) and Veterans’ Group Life Insurance (VGLI). Still, these may not offer the same features as private whole life insurance.
Frequently Asked Questions (FAQ)
What’s the difference between whole life and term life insurance?
Whole life insurance offers lifelong coverage and accumulates a cash value, whereas term life insurance provides coverage for a specific period and does not accumulate cash value.
How much does whole life insurance cost?
Premiums depend on factors such as age, health, and coverage amount, but are generally higher than term life insurance due to the lifelong coverage and cash value.
Can I borrow from my whole life insurance policy?
Yes, you can borrow against the cash value, typically tax-free. Unpaid loans reduce the death benefit.
Is whole life insurance a good investment?
It’s primarily a protection product with a savings component. Returns are lower than those of other investments, but they offer guarantees and tax benefits.
Do I need a medical exam for whole life insurance?
It depends on the policy. Some policies, especially for smaller amounts, may not require a medical exam.
Conclusion
First Command Whole Life Insurance is a robust option for military families seeking lifelong financial protection and a savings component. Its fixed premiums, cash value growth, and tax advantages make it a reliable choice for long-term planning.
However, the higher premiums and potential complexity require careful consideration, and some critics suggest exploring alternatives, such as term life insurance or low-cost investments.
By consulting with a First Command advisor, you can determine if this product fits your financial goals and secure your family’s future with confidence.
