USAA Insurance Company Review
USAA, or the United Services Automobile Association, is an insurance and financial services company that specializes in providing products for members of the military and their families. Although it started as a car insurance company, USAA now provides a wide variety of services including investments, retirement accounts, mutual funds, renters' insurance. and life insurance tailored for military members.
Currently the company's services are only available to active duty members of the US military, retired members of the military, widows or widowers of service people killed in duty, those honorably discharged from the military after Jan. 1, 1996, and spouses and children of military personnel. The organization has been making a strong push for new members in recent years.
USAA was organized in 1922 by 25 US Army officers in San Antonio, Texas. The purpose of the company was to provide car insurance for servicemen and their wives. By 1928 it had issued over 8,000 policies to members of the military. By 1940 it had 30,000 members and 60% of all military officers were buying insurance from it. In 1951, the company opened its first office in Frankfurt, Germany, to provide services to US troops stationed there. In 1963, the USAA Life Insurance Company was organized and started offering life insurance to officers.
The USAA organized a fund management company in 1970 and it started offering no load mutual funds to its customers in 1973. The USAA Casualty Company was organized in 1973 to insure servicemen's family members. An investment management company, USAA Buying Services, was organized in 1977The USAA Federal Savings Bank which offers savings and checking accounts for members of the military opened in 1983.
In 1996, USSA started offering its services to enlisted personnel as well as military officers. In 2008, retired service people, honorably discharged members of the military and servicemen's widows become eligible for its services.
USAA Financial Ratings
Even though it operates in a number of diverse businesses such as a savings bank and credit cards, USAA has impressive financial strength ratings. Its life insurance subsidiaries get the highest financial strength ratings from three of the four major financial analysis companies.
A.M. Best gave USAA a grade of A++, which is the highest financial strength rating awarded to insurers. Best's experts believe that USAA has an excellent capacity for meeting its obligations and that there are no substantial threats to USAA's financial health looming on the horizon.
Moody's graded USAA Aa1, which is that firm's second highest score for insurer financial strength. This indicates that Moody's analysts felt the company faced no major financial problems.
Standard & Poor's (S&P) gave USAA a rating of AAA, which is the highest financial strength rating. This means that S&P's reviewers found no threats to the company's ability to meet its obligations.
It should be noted that the review for USAA from one of the major financial analysis firms, Fitch's is missing. This does not necessarily indicate that anything wrong but it does show a lack of information. S&P, Moody's, and A.M. Best gave good ratings to USAA's other insurance operations as well.
The USAA also regularly wins awards for its customer service and its banking operations. Its savings bank has been rated one of the best in the nation. It should be noted that the banking operations expose USAA to some risks not normally undertaken by other insurance companies.
USAA Life Insurance
USAA provides life insurance options not normally seen elsewhere: combination life, military life, and simplified whole life. It also provides universal, permanent, and term life insurance policies. The basic term life policies advertised on its website seem to be a good deal, offering $500,000 worth of coverage for 20 years for a $49 a year premium. This would be an excellent deal for a single person.
The combination life insurance policy marries a simplified whole insurance policy and a term life insurance policy. A person could buy $100,000 worth of whole life and $250,000 worth of 30 year term life for example. The whole life insurance provides a death benefit that lasts until age 121. Military life insurance is a term policy that supplements the policies available to individuals on active service. It has the advantage of remaining in effect when somebody leaves the military.
USAA also offers deferred annuities, which it calls savings annuities. Indexed and variable annuities do not appear to be available. Only fixed interest rate products are offered. The interest rates on the annuities are available at the company's website along with surrender charges.
A variety of other financial services including wealth management, brokerage accounts, and a full range of insurance services are offered by USAA. USAA does a very good job offering basic banking and insurance services to the military but its retirement investment options are limited. Those seeking an annuity should be able to find more choices elsewhere.