Life insurance is an important financial tool that provides protection for your loved ones in the event of your passing. Two popular providers of life insurance for military members and their families are USAA and Navy Federal Credit Union. But which one offers the better life insurance options?
In this comprehensive guide, we’ll compare USAA and Navy Federal life insurance policies side-by-side. We’ll look at the pros and cons of each provider’s offerings to help you determine which is a better fit for your needs and budget.
A Brief Comparison Table
| Feature | USAA | Navy Federal |
| Types of Life Insurance Offered | Term, whole life, universal life | Term only |
| Permanent Coverage | Yes | No |
| Policy Term Lengths | 10, 15, 20 or 30 years | 10, 15, 20 or 30 years |
| Coverage Amount | Up to $10 million | Up to $1 million ($5M for easy issue) |
| Cash Value Policies | Yes | No |
| Discounts Available | Multi-policy, wellness rewards | Wellness discount only |
| Underwriting Approach | Thorough review of health/family history | Streamlined for easy issue policies |
| Access to Agents | Yes, licensed reps available | No agents, online/phone support only |
| Membership Requirement | Yes, military affiliation required | Yes, military affiliation required |
| Riders Offered | Limited availability | Limited availability |
| Premium Payment Options | Annual, semi-annual, quarterly, monthly bank draft | Monthly bank draft only |
| Financial Strength Ratings | Excellent – A++ (Superior) AM Best | Excellent – A++ (Superior) AM Best |
Overview of USAA Life Insurance
USAA (United Services Automobile Association) is a financial services company that exclusively serves military members and their families. They offer a wide range of insurance products including car, home, renters, valuables, umbrella, and of course, life insurance.
USAA has several permanent and term life insurance options including:
- Whole Life – Offers lifetime coverage along with a cash value savings component. Premiums are fixed.
- Term Life – Provides temporary death benefit coverage for 10, 15, 20, or 30 years. Premiums increase every renewal period.
- Universal Life – Flexible permanent coverage with adjustable death benefit and premiums. Earns a cash value.
Other perks with USAA life insurance include discounted rates if you have other USAA products, no war or aviation exclusions, and coverage for eligible family members.
Overview of Navy Federal Life Insurance
Navy Federal Credit Union is the largest credit union in the world. Membership is open to military personnel and their families. Navy Federal offers value-packed term life insurance policies with guaranteed level premiums.
Coverage options include:
- 10, 15, 20, or 30-year terms – Affordable temporary coverage for the chosen duration. Rates will increase upon renewal.
- Easy Issue – Streamlined underwriting up to $250k coverage for those in excellent health.
- Family plans – Spouse and child riders available.
Navy Federal term life does not earn cash value but does include accelerated death benefits for terminal illness. Other perks include waiver of premium for disability and conversion options.
Also Read: Comparison Between Country Financial And State Farm.
Key Differences Between USAA and Navy Federal Life Insurance
Now that we’ve looked at an overview of each provider, let’s compare the pros, cons and others features of USAA and Navy Federal life insurance.
Pros of Choosing USAA Life Insurance
There are several advantages to purchasing coverage through USAA:
Reputable Provider – USAA has over 90 years of experience serving military families. They have strong financial ratings and are known for good customer service.
Permanent Coverage Options – In addition to term life, USAA offers whole life and universal life plans that provide lifelong protection. These policies accumulate cash value.
Available Discounts – USAA offers discounts on life insurance if you bundle with other products like auto insurance. Multi-policy discounts can save you 10% or more.
Wellness Rewards – Policyholders can save up to $200/year through USAA’s wellness rewards program for completing health actions like exercising and preventative screening.
Access to Licensed Agents – USAA has knowledgeable representatives to help explain policy options and assist with the application and underwriting process.
Cons of USAA Life Insurance
Here are a few potential drawbacks of coverage through USAA:
Membership Required – You or an immediate family member must be affiliated with the military to qualify for USAA insurance. No exceptions.
Limited Plan Options – USAA has fewer types of life insurance compared to some other insurers. No indexed universal life or survivorship plans.
Underwriting Can Be Strict – USAA uses very thorough underwriting including check of records and family history. This makes it harder to qualify if you have health issues.
Higher Rates for Permanent Coverage – Cash value life insurance plans like whole life are quite a bit more expensive than term insurance. Expect to pay higher premiums for lifelong coverage.
Limited Riders – USAA policies do not offer as many supplementary riders and benefits as some competitors. Disability waiver of premium not available.
Pros of Choosing Navy Federal Life Insurance
Now let’s look at some of the biggest benefits of life insurance through Navy Federal:
Affordable Premiums – Navy Federal offers some of the lowest term life insurance rates, especially for healthy applicants that qualify for easy underwriting.
Easy Enrollment – Applying for Navy Federal life insurance coverage is simple and convenient through online application and tele-interview.
Guaranteed Level Rates – Navy Federal term life premiums are locked-in for the entire duration of the initial term period. No unexpected rate hikes.
Protection Up to $1 Million – Navy Federal provides up to $1 million in term life coverage with streamlined underwriting. Higher amounts available thorough full underwriting.
Wellness Discount – You can save up to $200 per year by completing health activities like exercising, preventive screening, not using tobacco and maintaining healthy BMI.
Cons of Navy Federal Life Insurance
A few drawbacks to be aware of with Navy Federal term life insurance include:
Membership Required – You or a family member must be affiliated with the military or a participating organization to qualify for a Navy Federal account.
Term Life Only – Navy Federal only sells term insurance. No permanent coverage like whole or universal life available.
Limited Policy Riders – Navy Federal term life plans have fewer supplementary riders compared to some competitors.
No Licensed Agent Support – Must complete own research and enrollment online or via phone app. No one-on-one guidance from licensed reps.
Strict Underwriting – Navy Federal will thoroughly review health and family history. Pre-existing conditions and other risk factors could lead to higher premiums or decline.
Features Comparison
Here is a more in-depth comparison of the key differences between USAA and Navy Federal life insurance:
- Types of Life Insurance Offered
USAA provides a range of permanent and term life insurance policies including whole life, universal life, and term life. This gives you the flexibility to choose coverage that fits your budget and needs now, with the option to convert to permanent coverage later.
Navy Federal only offers term life insurance. While their term policies are very affordable, they do not provide lifelong protection or cash value accumulation. If you know you want permanent life insurance, Navy Federal would not be the best choice.
- Permanent Coverage
One of the biggest advantages USAA has over Navy Federal is that they offer permanent life insurance. USAA’s whole life and universal life policies provide lifelong protection as long as premiums are paid.
These permanent policies also build cash value that you can access via policy loans if needed. Navy Federal only sells term life insurance, which expires after the set term length so does not provide lifelong coverage.
- Coverage Amounts
Navy Federal provides up to $1 million in coverage through their streamlined easy issue underwriting. For healthy applicants, this is a fast and simple way to get ample term life insurance coverage without lengthy medical exams.
USAA thoroughly underwrites all life insurance applicants regardless of the coverage amount requested. So you can qualify for up to $10 million in coverage if approved, but the application process will be more rigorous.
- Cash Value Policies
USAA offers permanent cash value life insurance plans including whole life and universal life. These policies build cash value that you can borrow against if needed, while maintaining your death benefit protection.
Navy Federal does not offer any cash value life insurance products – only term life. If you want permanent coverage with cash accumulation, USAA would be the better choice over Navy Federal.
- Agent Support
A key advantage USAA has is providing licensed agent support to explain policies, answer questions, and guide you through enrollment. Navy Federal does not have any life insurance agents on staff.
If you want personalized advice and human interaction when selecting coverage, USAA’s access to knowledgeable representatives makes the process smoother. Navy Federal is fully online/phone based support only.
Also Read: Comparison Between New York Life Insurance And Primerica.
Frequently Asked Questions (FAQs)
There is no definitively “better” option as it depends on your budget, life stage, and specific coverage needs. USAA is better if you want permanent life insurance that accrues cash value. Navy Federal is a better choice if you simply need affordable term life insurance.
For most people looking for temporary coverage, Navy Federal term life presents a better value. Premium rates are very competitive and policies include helpful benefits like guaranteed level rates, accelerated death benefits, and wellness discounts.
USAA stands for United Services Automobile Association. USAA offers whole, term, and universal life insurance options to military members and their families. USAA life insurance provides flexible options and strong customer service from a leading insurer.
The U.S. Navy does not endorse or use any single life insurance company. Active duty Navy personnel have access to low-cost term life insurance called SGLI from the government. Many Navy members and families choose to supplement this coverage with private life insurance through highly-rated providers like USAA and Navy Federal.
Also Read: Differences Between Amerigroup And UnitedHealthcare.
Final Thought
USAA and Navy Federal both offer solid life insurance options for military personnel. Here are a few key questions to help you select the right provider for your needs:
- Do you want permanent insurance with lifelong coverage and cash value? If so, choose USAA.
- Is your priority to get as much affordable term coverage as possible? Go with Navy Federal.
- Do you want access to personalized advice from an agent? USAA may be preferable.
- Are easy online enrollment and discounts most important? Then select Navy Federal.
- Do you have an existing relationship with USAA or Navy Fed through banking or other policies? Starting your life insurance there simplifies things.
In summary, USAA and Navy Federal provide quality life insurance tailored to military members at competitive rates. Carefully consider your budget, coverage goals, and preference for online or agent support when choosing between these two excellent providers. With either option, you can feel confident knowing your loved ones will be protected by a reputable insurer that understands military life.
