Military Financial ReadinessWe Protect Them While They Protect Us
Financial Education for the Military
Financial issues that impact military families can affect military readiness. Financial readiness is military readiness. Auburn Mountain Financial Education Services provides conflict free and nonpartisan information to help protect the assets and wealth of military families.
Serving Military Families
Financial Services Professionals really need to understand the three issues that impact the Financial Readiness of military personnel:
- Investing Issues
- Lending and Credit Issues
- Insurance Issues
Investing Issues
In the past, there have been Financial Services companies and their representatives that have been disguising, marketing and selling high cost periodic payment plan certificates solely to military personnel on military bases. These salespersons have disguised the product and themselves to appear endorsed by the Department of Defense or other branches of the federal government.
What interesting is that these types of plans are nonexistent in the civilian markets. They tend to mimic mutual funds except that the extremely high sales front end commissions results in a loss of earnings over the years. To make matters worse... Investors who got wise and tried to cash out found themselves hit with large surrender fees.
United States Securities and Exchange Commission
The United States Securities and Exchange Commission –SEC testified before the Senate Committee on Banking, Housing, and Urban Affairs on November 17, 2005. In the report, Chairman Shelby, Ranking Member Sarbanes and Members of the Committee expressed the SEC's concerns in its report titled; Financial Product Sales: Actions Needed to Better Protect Military Members (GAO-06-23).
Full Report
Help and Protection Is Here
With support from U.S. Department of Defense, Financial Industry Regulatory Authority Education Foundation provides financial education help to military families.
Help From FINRA
Lending Issues
Starting October 1, 2007, a new federal regulation prohibits creditors making payday loans, vehicle title loans and tax refund anticipation loans to active duty Service members and their dependents with annual percentage rates over 36 percent. The rule regulates the terms of payday loans, vehicle title loans and tax refund anticipation loans when extended to active duty service members and their dependents , known as 'covered borrowers'. These three products have high interest rates, coupled with short payback terms.
Military Personnel Are Vulnerable
Soldiers are ideal targets for payday loans, vehicle title loans and tax refund anticipation loans. They have a steady income from the government, often with little to spare. At deployment time, when military families are faced with extra expenses at home and abroad, they may be more vulnerable to the promise of quick cash from payday lenders.
Get Help Now!
Predatory Lending Threatens Military Readiness
Payday lending is a problem not only for the soldiers, but for the mission of the military. We need our service men and women focused while executing their duties. When they are not paying attention…this threatens military readiness. Financial Services Professionals encountering consumers with short term money needs should direct them to military credit unions that offer short-term loans with fair loan terms to servicemen and servicewomen in need of emergency funds, as an alternative to abusive payday loans.
Insurance Issues
Military personnel should heed the advice of the
National Association of Insurance Commissioners. Members of the armed services can be deployed on short notice, leaving little time to address their personal or business affairs. Insurance coverage, in particular, is often affected when someone moves out of state or spends an extended period of time away from home.
Financial Services Professionals should advise military clients that before purchasing any insurance policy, it is a good idea to ask the agent or broker specific questions about how the company will handle issues related to the deployment of their policyholders who are in the military. Each company’s guidelines can vary. By shopping around, you may be able to find an insurer who takes the specialized needs of service members into account.
It might be difficult to handle routine business like paying premiums timely or renewing policies when you’re deployed. Financial Services Professionals should advise military clients to talk to their agent before deployment to learn when a policy is up for renewal and to make arrangements to pay your premiums. Military clients may be able to renew a policy early or have your premiums paid by automated bank draft. Some insurance companies might also allow you to suspend certain coverage while you’re deployed. Most insurance companies use payment history and continuity of coverage as factors to determine their rates and eligibility standards.
If your insurance lapses or expires while you’re away, you could come home to find companies unwilling to insure you or only willing to do so at a higher.
Get More Helpful Information
10 Red Flags
- Solicitation of insurance products as “investment” or “savings” products sold as or with savings or investment products.
- Cash value life insurance pitched as a retirement solution
- Solicitation of insurance products that provide very low death benefits while charging very high premiums.
- Non-military personnel posing as financial counselors or advisors on veterans’ benefits.
- Non-military or ex-military or former military personnel acting as investment advisors in a group or classroom.
- Pressure to rush through the application process, to complete an allotment form or to authorize withdrawal of funds from your bank account for the purchase of a life insurance policy.
- Agents selling on the base without authorization from your base solicitations officer or the Department of Defense.
- Agents selling without a valid license from a state insurance department.
- Delays in receiving a copy of the contract.
- Unanswered phone call and emails to agent, representative, or company
The NAIC “Tips on Buying Life Insurance”
- Make sure you feel comfortable with the insurance agent and company.
- Individuals that solicit life insurance on military installations are required to obtain authorization from the Department of Defense as an authorized solicitor and all insurance agents must have a license from a state insurance department. Ask to see the agents’ permits or licenses.
- Decide how much you need, for how long, and what you can afford to pay.
- Learn what kinds of policies will provide what you need and pick the one that is best for you.
- Do not sign an application until you review it carefully to be sure the answers are complete and accurate.
- Do not buy life insurance unless you intend to stick with your plan. It may be very costly if you quit during the early years of the policy.
- Do not feel pressured to sign an allotment form during a classroom session related to financial planning that includes a solicitation to purchase life insurance or investment products.
Resources That Enable You to Make Informed Decisions
Military Legal Assistance Web sites
MilitaryOneSource.com
Military One Source: Use the Search Engine to find current Financial Readiness Resources
Military SentinelMilitary Sentinel is a project of the Federal Trade Commission and the Department of Defense used to identify and target consumer protection issues that affect members of the United States Armed Forces and their families.
Access complaints forms specific to your branch of service.
Health Care for Active Military Personnel
Insurance For Military
The Life and Health Insurance Foundation for Education
The
Life and Health Insurance Foundation for Education (LIFE) is a non-profit organization dedicated to addressing the public's growing need for information and education about life, health, disability and long-term care insurance.
Insurance Information Institute
The mission of the
Insurance Information Institute (I.I.I.) is to improve public understanding of insurance -- what it does and how it works. For more than 40 years, the I.I.I. has provided definitive insurance information. Today, the I.I.I. is recognized by the media, governments, regulatory organizations, universities and the public as a primary source of information, analysis and referral concerning insurance. Each year, the I.I.I. works on more than 3,700 news stories, handles more than 6,000 requests for information and answers nearly 50,000 questions from consumers. Let the
Insurance Information Institute help you with questions and information on Auto, Home, Life, Annuities, Health, Long-term Care Disability, Specialty Coverages and Business Insurance.
Financial Readiness Is Military Readiness