INSIGHT: New Law May Save Money for New USAA Life Insurance Company Term Life Policyholders

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For some members, the monthly premium cost for a new term life insurance policy became more competitive earlier this month.


For more than a decade, USAA has helped to influence political and regulatory changes. Using its mission as a north star, USAA Life Insurance Company has helped to make life insurance more available and competitive for members.


Principle-Based Reserves (PBR), a newly approved method of calculating required insurance reserves, focuses on the unique risks of an insurance product and the offering company. The new law and accompanying regulation, which took effect Jan. 1, seek to better calculate the reserves each company holds based on the level of risk involved. In USAA Life Insurance Company’s case, that means holding lower reserves. Technical terms and function aside, the bottom line is that USAA Life Insurance Company is passing those savings on to its members in the form of lower prices.


The regulatory changes mean USAA Life Insurance Company can continue to maintain its strong financial position, and it also gives us the flexibility to innovate more products. Military families and veterans — USAA’s unique membership — require different solutions than most civilians.


Several years ago, USAA Life Insurance Company introduced a military future insurability benefit1 on its term coverage, which allows a service member to effectively increase their term coverage at the point of military separation, helping to replace their Servicemembers Group Life Insurance (SGLI).


Military occupations inherently are riskier than most civilian jobs and present different considerations from an underwriting perspective; however, most military occupations still qualify for the most discounted premium rates with underwriting.


Members being deployed can apply for and receive accelerated underwriting and get an approval for a preferred nondiscounted premium — coverage many carriers do not offer. With new regulations in place, the country’s service members may be able to get the valuable protection their families need at a new, lower cost.


USAA Life Insurance Company issued its first PBR-compliant term policy Jan. 1 to a young, deploying military member. The member was able to complete his application, underwriting questionnaire and quote paperwork electronically and, because of his upcoming deployment, was approved for coverage immediately. This illustrates USAA Life Insurance Company’s continued goal of streamlining processes to provide more digital options and better functionality for members.


Members applying for term insurance in 2017 may see up to a 15% premium decrease. On average, new policies will be 2.6% lower than those issued under previous regulations. Existing USAA Life Insurance policies will not be affected because those issued prior to Jan. 1 will continue to require the level of reserves outlined by state laws at the time they were written.


With PBR in place, USAA Life Insurance Company looks to innovate further in the product development. While term cost reductions are an immediate victory, the new reserve method may pave the way for enhancements in permanent life insurance offerings or new riders that are aligned to members’ changing needs. This regulatory change is an immediate victory for USAA members and families who can take action to avoid the financial strain of losing a loved one.


Use USAA’s Life Needs Calculator2 to review your coverage needs and get a quote for life insurance to help protect your family.



¹Increases in coverage more than two times the base policy face amount and up to the current maximum Servicemembers Group Life Insurance (SGLI) amount depend on your health and are subject to underwriting approval.


²This calculator is a self-help tool. You should enter figures that reflect your individual situation. This information is provided for illustrative purposes only. The above life insurance needs estimate is based in part on the age and information you entered and results may vary depending on your individual circumstances.



Life insurance and annuities provided by USAA Life Insurance Company, San Antonio, TX, and in New York by USAA Life Insurance Company of New York, Highland Falls, NY. All insurance products are subject to state availability, issue limitations, and contractual terms and conditions.  Each company has sole financial responsibility for its own products.



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