USAA Life Insurance Review

About USAA Life Insurance

The United States Automobile Association (“USAA”) was formed in 1922, when a group of army officers decided to form an insurance company for the purpose of insuring servicemembers’ vehicles.  Today, USAA provides a host of financial services to servicemembers, veterans, and their families—including numerous types of insurance, banking, investment assistance, and retirement planning.

Founded in 1963, USAA’s life insurance affiliate, USAA Life Insurance Company, offers term, whole life, and universal life options to the communities it serves.

Notably, USAA is member-owned and only members are eligible to apply for policies through the company.  USAA Life is also noteworthy in that its policies do not include the exclusions for wartime deaths that are ubiquitous in the policies of many other life insurance carriers.

USAA’s communications with policyholders and applicants are almost always direct, with consumers speaking to employees at USAA’s San Antonio headquarters rather than to local agents.

USAA Life issues policies to eligible applicants in every state but New York.  An affiliate company, USAA Life Insurance Company of New York, provides coverage in New York.

USAA Life Financial Ratings

A.M. Best: A++
Fitch: NR
Moody’s: Aa1
S&P Global: AA+
Comdex Ranking: 99

USAA Life’s A++ “superior” rating maxes out A.M. Best’s ratings system, and the company is very near the top of the other leading financial rating services as well.  That means that when you purchase a USAA Life policy, the risk that the company will be financially unable to fulfill its policy obligations is small.

While USAA Life is not accredited by the Better Business Bureau, it currently holds an A+ score from BBB.  In general, USAA usually receives high marks for its customer service.

Products Offered by USAA Life:

• Term Life Insurance
• Whole Life Insurance
• Universal Life Insurance
• Guaranteed Income and Savings Annuities

Life Insurance Policies Offered by USAA Life

Level Term V:

USAA’s Level Term V policy comes with initial terms of 10, 15, 20, 25, or 30 years.

Term life insurance rates and benefit amounts are both fixed for the duration of the initial term.  Upon conclusion of the term, coverage can be renewed annually for an additional premium.

The application process includes health-screening questions and a medical check-up, which can be scheduled at the applicant’s home and is waived for deploying servicemembers.

USAA’s term policies include a standard conversion option allowing policyholders to convert a term policy into either whole life or universal life.

Military Protection Plus (term):

Military Protection Plus provides level term coverage for defined term lengths and includes both the Military Severe Injury Benefit Rider and Military Future Insurability Rider at no extra cost.

Available coverage amounts are limited by the insured’s rank and occupation.

The application process includes health-screening questions and a medical check-up, which can be scheduled at the applicant’s home and is waived for deploying servicemembers.

Simplified Whole Life Insurance:

USAA’s Simplified Whole Life Insurance is a straightforward cash value whole life policy.

Whole life insurance premiums and death benefit amounts are guaranteed to stay the same for life, and policies accumulate cash value that grows tax-deferred.

Limited pay life insurance is available so policyholders have the option to schedule premiums so that a policy is paid-up after 20 years, paid-up when the insured reaches age 65, or will require premiums throughout the insured’s entire life (or through age 121).

The Life Event Option lets policyholders purchase additional coverage upon reaching major life milestones (e.g., getting married, having a child, buying a home) through age 45, with no additional underwriting required.  The option may be exercised up to six times over the life of a policy, as long as the total coverage after purchase does not exceed $1 million.

Universal Life Insurance:

USAA’s Universal Life insurance policy features the tax-deferred growth and flexible coverage and premiums characteristic of universal life.

Existing cash value can also be applied toward premium payments, allowing the policyholder to occasionally “skip” payments (though the policy’s cash value decreases as a result).  However, during the first ten years after a policy is issued, cash value withdrawals incur a $25 early withdrawal charge.

Policy growth rates are variable, though subject to a minimum annual rate (2% in most states).  Higher face-value policies earn higher returns, with policies over $100,000 currently (as of 2020) earning 4.25%, compared to 3.25% for lower-face-value policies.

Available Life Insurance Riders

Child Protection Plan Rider:

If purchased, the rider provides supplemental term coverage for all of the insured’s minor children.  Upon reaching adulthood, the covered children can convert the supplemental term coverage into whole life without any additional underwriting.

Military Severe Injury Benefit: 

Included in term policies at no extra charge, this rider provides $25,000 in coverage for insureds who suffer a major injury—such as blindness, paralysis, or loss of limb—while on active duty.

Term Life Event Option Rider:

For no additional cost, new insureds age 35 and under receive the option of purchasing up to $100,000 in additional term coverage, with no extra underwriting, upon the occurrence of a major life event (e.g., getting married, having a child, buying a home).  The option lasts until the insured reaches age 45.

Military Future Insurability Rider:

This rider guarantees that insured servicemembers will be able to retain or obtain coverage upon separation from military service.