After Army Staff Sgt. Richard Hendricks made a permanent change-of-station move from Fort Campbell, Kentucky, to Fort Riley, Kansas, in November, he agreed to have a financial planner evaluate his insurance policies to make sure he has enough protection for him and his family.
When troops make a PCS move, they have a number of factors to consider when evaluating their insurance coverage. For example, the Hendrickses own their home near Fort Campbell, and it became a rental property when they moved, so the homeowners policy was converted to a landlords policy.
JJ Montanaro, a certified financial planner for USAA, worked with the Hendrickses to review their insurance policies.
"I knew I was pretty much covered, and not that much surprised me. I'm very thankful for all the information he provided. He was very helpful," Richard Hendricks said, adding that he gained more peace of mind from the review from an outside expert.
One important aspect of insurance is having an adequate emergency fund to cover deductibles, Montanaro said. A higher deductible can help reduce the cost of insurance premiums for cars and homes, for example, but people must be prepared to pay that deductible if something happens.
"Oftentimes I see folks with large deductibles that they would have to use credit to be able to meet," Montanaro said.
The Hendricks have $3,000 in an emergency fund, more than adequate to cover their $500 deductible for comprehensive and collision auto coverage. The $3,000 emergency fund is a good baseline to maintain until they've paid off their nonmortgage debt. After that debt is gone, Montanaro suggested the Hendricks should work to build up a $10,000 cushion over time.
Homeowners insurance: The Hendrickses changed their homeowners policy to a landlords policy when they moved. "Often it's a surprise to see (that) this type of policy can cost a bit more, but in your case the premium actually dropped a few dollars," Montanaro said. "One key element of that coverage is the $300,000 of liability protection it provides for you guys in the event something happens at your property that results in a lawsuit."
Renters insurance: The Hendrickses live in privatized military housing, and think the $20,000 of renters insurance offered as part of that package is adequate for their needs. "In the same vein, you don't own any expensive items that would necessitate having a personal articles floater," Montanaro said, such as jewelry, collectibles and antiques that might require a valuable personal property policy.
Auto insurance: "It's important for folks to periodically review and understand the details" of their auto coverage, Montanaro said. "PCS moves in the military will have you moving from state to state, and coverage requirements and rules can change based on where you are, so that makes periodic review even more critical for military families."
Liability coverage protects drivers if they injure other people or damage property. Montanaro cautioned that mandatory requirements vary from state to state, and some states' requirements may not be adequate for some people.
He suggested that the Hendrickses boost the property damage liability portion of their auto coverage to $100,000 from the current $50,000. This coverage pays for any damage that the driver causes to other cars or property, such as fences and light poles.
"You want to have enough insurance to pay for any damage you might cause, and with car prices being what they are …" Montanaro said.
Hendricks said that after talking to his insurance company about the cost, he has in fact doubled that coverage to $100,000, at an added cost of only about $12 a year. "That gives me peace of mind that we're covered for anything that might happen," he said.
Life insurance: Montanaro walked through a life insurance calculator and determined that the $400,000 in Servicemembers' Group Life Insurance coverage, along with the $100,000 death gratuity, are adequate for the Hendricks family's future needs, should something happen to Richard.
Montanaro, who said he was "pretty surprised" at the results, included survivor benefits from Social Security in the calculation. "The roughly $2,700 per month Social Security would pay ... is not insubstantial," he said.
Hendricks' wife, Danielle, is a stay-at-home mom, and they have the maximum $100,000 coverage through the Family SGLI program for her. That program is available for military spouses in conjunction with the SGLI program. Based on their evaluation of her efforts as a stay-at-home mom, the $100,000 coverage is an important factor in their overall coverage, Montanaro said. It could help defray the costs of child care, for example, if something happened to Danielle.
Montanaro stressed that it's important to re-evaluate life insurance needs at every life event — such as a job change, house purchase and birth of a child.
Karen has covered military families, quality of life and consumer issues for Military Times for more than 30 years, and is co-author of a chapter on media coverage of military families in the book "A Battle Plan for Supporting Military Families." She previously worked for newspapers in Guam, Norfolk, Jacksonville, Fla., and Athens, Ga.
