MCI 34.






34.20e 1 Mar 98

MCI 34.20e, PERSONAL FINANCIAL MANAGEMENT 1. Purpose. MCI course 34.20e, Personal Financial Management, has been published to assist Marines in their management of personal financial matters. 2. Scope. MCI 34.20e addresses the need to inform our Marines of the many aspects of personal financial management. Items addressed are collecting and safeguarding important papers; veterans benefits; insurance policies, including Servicemen's Group Life Insurance (SGLI) and Veteran's Group Life Insurance (VGLI); miltary retirement; budget formation and management; choosing financial institutions; check writing, recording, and reconciliation; opening and maintaining checking accounts; obtaining loans; credit guidelines; and other pertinent subjects. 3. Applicability. This course is intended for instructional purposes only. It is designed for use by Marines in the ranks of Pvt-MSgt in all MOSs. 4. Recommendations. Comments and recommendations on the contents of the course are invited and will aid in subsequent course revisions. Please complete the course evaluation questionnaire located at the end of the text and return it to: Director Marine Corps Institute ATTN: Support Team Washington Navy Yard 912 Poor Street SE Washington, DC 20391-5680

G. White Lieutenant Colonel, U.S. Marine Corps Deputy Director

PERSONAL FINANCIAL MANAGEMENT CONTENTS Page Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i Student Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii Study Guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v Study Unit 1 Lesson 1 Lesson 2 Important Papers Identify, Locate, and Safeguard Your Important Papers . . . . . . . . . . . . . 1-1 Estate Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-8 Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-15 Military Benefits 2-1 2-17 2-22 2-25 2-31 2-38

Study Unit 2

Lesson 1 Life Insurance Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lesson 2 Military Health Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lesson 3 G.I. Bill Educational Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lesson 4 Other Veterans Administration (VA) Benefits . . . . . . . . . . . . . . . . . . . . . . . Lesson 5 Retirement Pay Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unit Exercise ......................................................... Study Unit 3 Financial Planning

Lesson 1 Planning Your Financial Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lesson 2 Choosing a Financial Institution and Type of Savings Program . . . . . . . Lesson 3 Selecting and Maintaining Your Checking Account . . . . . . . . . . . . . . . . . . Unit Exercise ......................................................... Study Unit 4 Financing Major Purchases

3-1 3-9 3-17 3-32

Lesson 1 Examining Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lesson 2 Purchasing a Motor Vehicle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lesson 3 Purchasing Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unit Exercise ......................................................... Review Lesson

4-1 4-10 4-13 4-18

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STUDENT INFORMATION TITLE& NUMBER: STUDY HOURS COURSE MATERIALS: REVIEW AGENCY: PERSONAL FINANCIAL MANAGEMENT MCI 34.20e 7 Text MARINE CORPS FINANCE CENTER Kansas City. iii . For assistance concerning course content matters. have your training officer or NCO use the Unit Activity Report (UAR) or MCI Hotline: 1-800-MCI-USMC. RRC: ACE: ASSISTANCE: For administrative assistance. call the instructor at DSN 288-0219 or Commercial (202) 433-0219. Missouri 64197 2 Reserve Retirement Credits This course is scheduled for review by the American Council on Education during 1998.

willing to reach out for opportunities to learn and grow. you improve the Corps! YOU HAVE THE INITIATIVE TO ACT. YOU ARE ABLE TO SET AND ACCOMPLISH PRACTICAL GOALS. insurance policies. You made a positive decision to get training on your own. including Servicemen's Group Life Insurance (SGLI) and Veteran's Group Life Insurance (VGLI). like you. you have shown you are a self-starter. obtaining loans. Doing whatever is necessary to learn is MOTIVATION. Items addressed are collecting and safeguarding important papers. provides instruction to all Marines on personal finances. MCI course 34. You are willing to commit time. recording. YOU ACCEPT CHALLENGES. budget formation and management. improve their technical job performance skills through distance training. Personal Financial Management. and reconciliation. miltary retirement. You have it! YOU SEEK TO IMPROVE YOURSELF. By enrolling in this course. By acting on your own. check writing.20e.STUDY GUIDE Congratulations on your enrollment in a distance training course from the Marine Corps Institute (MCI). the Marine Corps Institute has been helping tens of thousands of hard-charging Marines. effort. you have shown a desire to improve the skills you have and master new skills to enhance your job performance. Because you have chosen to learn at a distance by enrolling in this MCI course. opening and maintaining checking accounts. v . The distance training course you have chosen. veterans benefits. enabling you to meet every challenge. When you improve yourself. and the resources necessary to set and accomplish your goals. Self-motivation is perhaps the most important force in learning or achieving anything. and other pertinent subjects. choosing financial institutions. These professional traits will help you successfully complete this distance training course. your professional traits are evident and we know YOU ARE PROPERLY MOTIVATED. You have self-confidence and believe in your ability to acquire knowledge and skills. Since 1920. You have the self-confidence to set goals and the ability to achieve them. You enrolled to improve those skills you already possess and learn new skills. credit guidelines.

Follow the same procedure for each study unit in the course. On this page. you. Notice the Table of Contents covers specific areas of study and the order in which they are presented. at the end of a lesson. familiarize yourself with them. familiarize yourself with the structure of the course text.STUDY GUIDE. Turn to the first page of study unit 1. As you read the lesson text. read the Student Information page. complete the exercise items and then check your responses against those provided. You will find the text divided into several study units and a review lesson. will be able to do as a result of mastering the content of the lesson text. Read the objectives for each lesson and then read the lesson text. or at the end of a study unit. LEAFING THROUGH THE TEXT Leaf through the text and look at the figures and tables. Read a few lesson exercise items (questions) to get an idea of the type of items in the course. and exercises. If you find any course materials missing. lesson or unit exercises. If the course has additional study aids. Without referring to the text. If you have all the required materials. To determine your mastery of the learning objectives and text. exercise solutions and references. One way to do this is to read the Table of Contents. repeating the above process until you have completed all lessons in the study unit. complete the exercises developed for you. lesson text. you will find an introduction to the study unit and generally the first study unit lesson. Each study unit is comprised of two or more lessons. Continue on to the next lesson. you are ready to begin. such as a handbook or a plotting board. Study unit lessons contain learning objectives. continued BEGINNING YOUR COURSE Before you actually begin this course of study. Learning objectives describe in concise terms what the successful learner. Exercises may be contained in a lesson. THE FIRST STUDY UNIT READING THE LEARNING OBJECTIVES COMPLETING THE EXERCISES CONTINUING TO MARCH vi . To begin your course of study. make notes on the points you feel are important. notify your training officer or training NCO.

Use your spare moments to review. you can do many of these things during the unused minutes of every day. Can you do it? Now look back at the text to see if you have left anything out. It is always best to use the skill or knowledge you've learned as soon as possible. CHALLENGE YOURSELF. Try to recall the entire learning sequence without referring to the text. make up and solve problems that use most of the elements of a study unit. ask your training officer or training NCO for assistance. If they cannot help you. But with a little effort you'll be able to recall a great deal of the information. The following suggestions will help make the review interesting and challenging.STUDY GUIDE. check your responses against the answer key provided with your course materials. request assistance from your MCI distance training instructor by completing the Content Assistance Request Form located at the back of the course. at least try to imagine a situation in which you would apply this learning. USE UNUSED MINUTES. you'll find you were not able to recall everything. make up and solve your own problems. complete the review lesson exam located at the end of the course text. better still. review again. This review should be interesting. For example. Try to complete the review lesson exam without referring to the text. For those items you are unsure of. When you have finished the review lesson exam and are satisfied with your responses. Or. THE REVIEW LESSON EXAM PREPARING FOR THE FINAL EXAM vii . APPLY WHAT YOU HAVE LEARNED. restudy the text. If it isn't possible to actually use the skill or knowledge. continued SEEKING ASSISTANCE If you have problems with the text or exercise items that you cannot resolve. rework exercise items. Undoubtedly. learned in the course. Read your notes or a part of a study unit. When you have finished all the study units.

They don't have to be long and tedious. COMPLETING YOUR COURSE The sooner you complete your course. Before taking your final exam. some learners find short reviews conducted more often prove more beneficial. Your training NCO or officer will administer the final exam and return the exam and answer sheet to MCI for grading." MAKE REVIEWS FUN AND BENEFICIAL. your unit. read the directions on the generic DP-37 answer sheet carefully and complete all requested information. In addition. please complete the Student Request/Inquiry form (MCI-R11) located at the back of the course. take the sealed envelope marked "FINAL EXAM" to your unit training NCO or training officer. Choose a particular study unit and let your buddy "fire away. In fact.STUDY GUIDE. you may be granted one 6-month extension if approved by your commanding officer. Ask another Marine to lend a hand by asking you questions about the course. and the Marine Corps. As a graduate of this distance training course and as a dedicated Marine. your job performance skills will improve. benefiting you. Reviews are good habits that enhance learning. GRADUATING! Semper Fi! viii . and deliver it to your training officer or training NCO. TACKLING THE FINAL EXAM When you have completed your study of the course material and are confident with the results attained on your review lesson(s). continued USE THE "SHAKEDOWN CRUISE" TECHNIQUE. the sooner you can better yourself by applying what you've learned! HOWEVER--you do have 12 months from the date of enrollment to complete this course. If you need an extension.

Since these important papers define your personal financial status. These documents are essential to your financial well-being. 4. 2.STUDY UNIT 1 IMPORTANT PAPERS Introduction. A key to sound financial management is proper documentation. Financial records.--and provides strategies for storing and safeguarding them. social security card. etc. Identify the appropriate places for duplicating your important papers. military records. motor vehicle title. Here is what it provides: (a) Detailed information (pay entitlements and deductions) covering your pay account for the previous month Forecasted amounts due for the paydays of the current month Leave balance Pay received (b) (c) (d) 1-1 . a. 1101. and personal records. entitlement records. Lesson 1. Identify safe and secure places to store your important papers. Most financial experts agree that preparing the necessary documents and keeping them up-to-date is the biggest challenge to successfully managing personal finances. IDENTIFY. LEARNING OBJECTIVES 1. Each active duty Marine receives a monthly LES. LOCATE. it is important to organize and safeguard them. (1) LES. AND SAFEGUARD YOUR IMPORTANT PAPERS This lesson helps you identify important documents--your birth certificate. 3. Categories of Important Papers Important papers generally fall into three categories: financial records. Each category is broadly outlined below. Identify three categories of important papers. leave and earning statement (LES). Identify sources for assistance in locating your important papers.

but occasionally you will need a copy of your current statement to qualify for a loan or substantiate your employment. regardless of how much or how little he or she owns. your spouse and family depend on your income. leave.Note: Each LES shows your cumulative record of pay. (a) Will. Trust. and deductions for the year. as you can see. These policies guarantee a specific sum of money to a designated beneficiary upon the death of the insured or to the insured if he or she lives beyond a certain age. A will is a legal declaration of how a person wishes his or her possessions to be distributed after death. you may need to refer to your LES when preparing your financial plans! Financial securities and investments. This means you will not need to keep every statement. Estate Planning. so treat your LES with respect! Also. You must plan for their support in case you die before your earning years are over. (2) (3) Note: (4) (b) 1-2 . You will learn how to draw up your will in the next lesson. The danger of loss of life is called "risk." Death is naturally your greatest risk because. A trust is an agreement where a person (grantor) makes arrangements to give his or her property/assets to someone else (trustee) to manage and administer for the benefit of a designated third party (beneficiary). Estate planning documents. These are records of any stocks or bonds you may have purchased or sold. Trusts are also discussed at greater length in the Estate Planning lesson.) Life insurance policies. in most cases. Every Marine should have a will. (Remember these transactions always affect your income tax and should be reported.

) b. and other significant lifetime events. Death certificate. Registration papers. Issued by the hospital or attending physician to record parentage and the date. social security. ____________________________________________________________ (The four pieces of information are your previous month's pay record. This certificate is needed for insurance claims.Before you go on to the second type of financial documents (entitlement documents). Proves legal ownership of valuable personal possessions. and proves permission to be operated in that location. Your children may need social security numbers to be enrolled in school. cars. Original deeds and mortgage liens. RV). These benefits are financed by taxes withheld from your earnings and contributions made by your employer. ____________________________________________________________ b. and veteran's benefits. or conveyance. as well as for estate claims. applying for a marriage license. A deed is a document sealed as an instrument of bond. Issued by the hospital or attending physician to substantiate the date. and time of death. Entitlement records. contract. your leave balance. This certificate is required for getting a passport. ____________________________________________________________ d. place. place. (1) (2) Titles (boats. Social security card. a forecast of your current month's pay record. write down the four pieces of information your LES provides: a. A title justifies legal claim to property. entering the military. such as cars and boats. Personal records. (1) Birth certificate. Financially identifies you to the IRS and entitles you to social security benefits when eligible. Most states now issue social security cards at birth. (2) (3) (4) 1-3 . c. You also need a social security card to enroll dependents in the Defense Enrollment Eligibility Reporting System (DEERS). and time of birth. and finally. ____________________________________________________________ c. your pay received.

the hospital where you were born will be able to send you a copy of your birth certificate. that is. Your S-1 (personnel office on base) can provide assistance in obtaining copies of military records and other important documents. start with your family (father/mother). S-1. and day of confirmation. Locating Important Papers In your quest to locate these important papers. Includes diplomas (high school. And. You need a marriage certificate for BAH or to obtain base housing. and other academic awards. Below are some of the agencies where you might go for replacement copies. 1-4 . college) certificates. contact your legal assistance office. This person may be referred to as your "attorney-in-fact. Religious records. If they do not have the record they can often tell you where to go to get these records. to be your agent. Documents that may include the date you joined a religious affiliation. You need your military records to obtain Veteran's Administration (VA) benefits or to pursue a career after leaving military service. School records. Normally. a. (6) (7) (8) Note: (9) Note: Are you familiar with these financial. Hospitals are a good place to start. Issued by the state to declare that a man and a woman are legally married. entitlement. b. and personal records? Have you been making a mental inventory of which of these records you need? Which do you already have? Do you know where they are? Suppose you are unable to find a record? Where would you go to get a replacement copy? Read on! 1102. Includes dates of service at various locations. They are experts in directing you to the appropriate agency where you may obtain replacement papers and records. when you are not present. School records are useful when pursuing a career after you leave military service. if you or a family member dies at a hospital. death certificate records are kept there too. Marriage certificate. A power of attorney provides written authorization for a person you designate to legally represent you. and other legal documents pertaining to your early life. and retirement orders.(5) Military records. If you can't find a record at home. awards. date of baptism. promotions. Different states have different marriage licensing requirements! Power of attorney. Your parents are likely to have your birth certificate." Power of attorney is mandatory for all Marines in case of deployment. They could also specify your preferred burial arrangements. baptism record. Hospitals.

c. can often provide replacement copies of important documents. Circuit courts may hold marriage and divorce records. 1103. Duplicating Your Important Papers There are two kinds of facilities where you can make copies of your important papers: a. New social security numbers or replacement cards are obtained at the Social Security Administration. it would be wise to list them. There are so many state agencies. Copy fees are usually not expensive. Note: You should record your DD-214 (discharge certificate) and the deed to your house (if you own one) at a circuit court. Most libraries (base and off-base) have copiers you can use for a nominal fee. _______________________________________________________________ b. entitlement. _______________________________________________________________ c. Now that you have collected your important papers. Libraries. There are many professional printing and publishing businesses (listed in the "yellow pages") that make copies for you or allow you to use their reproduction equipment. you may need to check with your Marine legal assistance officer for further guidance. such as the Department of Health and Human Services. b. stop to recall some key points covered so far. State agencies. hospitals and other agencies file their records here. IT IS ILLEGAL TO USE A GOVERNMENT COPIER MACHINE TO DUPLICATE IMPORTANT PERSONAL PAPERS! Before you consider where to permanently keep your important papers." Eventually. _______________________________________________________________ (Answers: financial. Can you list the three categories of important papers you will be keeping together? a. Don't forget to update the files periodically. and personal) 1-5 . Circuit courts and agencies. Then make a duplicate copy of the list and a copy of each important paper or document. This relatively simple precaution gives you copies to work with while leaving the originals in a more secure location. Commercial. These are referred to as "courts of record.

Keep in mind three considerations when filing your important papers: affordability. Any one of the following types of storage areas would ensure a higher degree of safety (and peace of mind) than your desk at home. where would you go for assistance? ____________________________________________________ (Your legal assistance office or S-1 will guide you in your attempt to replace missing records. 1-6 . a. you have identified what kinds of records and documents are important to keep and whom to go to for assistance in replacing them.) So far. 1104. such as a marriage license. _________________________________________________ d.Name all of the personal records that you now have in your own collection of important papers. _________________________________________________ e. Now. estate planning documents. __________________________________________________ (Your list of personal records should include a copy of your LES. stolen. or damaged in a fire or flood. _________________________________________________ b. _________________________________________________ f. life (and other) insurance policies. and degree of safety. your investment papers. consider carefully where to file and store the originals so they will not be in danger of being misplaced. and any other personal records. _________________________________________________ c. Safeguarding Important Papers After listing your documents and copying them. any titles or mortgage papers. Remember to inquire at appropriate hospitals for copies of birth and death certificates and at circuits courts and state agencies for other records. seriously consider what you will do with your important paper collection to protect it.) Now if one of these documents is missing and your family does not have it. convenience.

You will compare wills and trusts as estate planning instruments. Lawyer's office.) Will you ever use your government office copier to copy your important papers? ____________ (Answer: No!) Give one example of a location for your important papers that's more secure than your desk at home. policies. and procedures since these vary from place-to-place. This will help you develop a perspective on the factors you will need to balance to enhance your financial plan. You must keep your important papers in a safe place where you can locate them. Be sure to check on them periodically. Your attorney may have special accommodations for storing clients' important papers. Safety deposit box. If not. could be your best choice. how they are filed. Special safe. at your lawyer's office. Now. _________________________________ (Answer: Special safes at home. you will cover assets and liabilities in more detail. Be sure you understand the regulations and their meanings. Tell that person what the documents are. test yourself to see if you remember where would you go to duplicate important papers? __________________________________________ (Answer: Commercial printing and publishing businesses or your local base or off-base libraries. depending on your needs.) Lesson Summary. Visit your financial institution to find out its particular facilities. or in a safety deposit box at your bank. b. c. 1-7 . Ensure that someone you trust has access to your safety deposit box in case something happens.a. After you have copied your important papers and decided where to keep your original documents. This type of safe isn't expensive and. You can purchase or lease safes that are fireproof (and reasonably floodproof) to store your papers at home. he or she may assist you in your search for safe document storage. In lesson 2. and where those files are physically located. share the information with someone you trust.

2. BONDS. Look at other kinds of assets listed below. Estate planning is an important part of personal financial management. Assets An asset is defined as something of value which is owned. Your estate is everything you own (and everything you owe). 3. Describe the purpose of a will. STOCKS. This lesson also presents guidelines for ensuring these assets are protected and passed on to your loved ones using such legal instruments as a will. When you talk about assets you immediately think about common ones. ASSETS CASH VALUE OF MUTUAL FUNDS. 4. LIFE INSURANCE POLICIES. AND LIQUID ASSETS REAL ESTATE PERSONAL POSSESSIONS SUCH AS CARS AND JEWELRY 1-8 . LEARNING OBJECTIVES 1. Describe the purpose of a power of attorney. or power of attorney." List two sources available for legal advice in planning your estate. Establishing an estate plan is the best way to ensure your family's future. and is usually something tangible such as a building or car. such as checking accounts and savings account balances. trust. 5. Define the term "asset." Define the term "liability.Lesson 2. 1201. ESTATE PLANNING This lesson helps you gauge your financial standing or net worth by determining your assets and liabilities.

1202. These agencies have experience and knowledge that is so essential when it comes to helping you understand your legal matters and papers. you can determine your net worth. You should be reassured to know that any information you exchange with your legal assistance attorney either orally or in writing is confidential since the "attorney-client privilege" protects this communication." There are clauses. Legal Assistance Agencies There are two types of legal assistance agencies that are available to help you with your legal matters. Take a look at other kinds of liabilities listed below. legal documents are not written in "plain English. The SJA provides legal assistance attorneys to give legal advice and help prepare legal documents and correspondence. Legal assistance agencies are available to help you understand your legal matters and papers. Staff Judge Advocate (SJA). you are said to have a negative net worth. 1203. When you talk about liabilities. or was it a surprise? Does it suggest a need to adapt a new financial strategy. your goal would be to reverse that and make it positive. or the balance on a mortgage loan for your house. addendums. It would be a good idea to take the time now to make a list of your personal assets and liabilities and to come up with at least a rough idea of your financial balance. you immediately think about common ones such as automobile loans. By subtracting your liabilities from your assets. in the process of getting information.LIABILITIES = NET WORTH. The Marine Corps legal assistance programs that provide free professional help for Marines falls under the Office of the SJA. and attachments that you should review and have explained before you dare sign your name to any document. Therefore. Does it seem generally to be what you thought it was. you might need to contact a legal assistance agency. 1-9 . LIABILITIES BANK LOANS INSURANCE LOANS FINANCE COMPANY LOANS PROPERTY TAXES OWED INCOME TAXES OWED DPP ACCOUNT BALANCES OTHER DEBTS AND BILLS ASSETS . especially in these difficult and perplexing economic times? If so. Liabilities A liability is a legal responsibility to pay a debt. credit card balances. As you may already know. Here are the two types of agencies you can call on for legal assistance. a. If your assets are greater than your liabilities.

take with you any relevant background information about your problem. a. therefore. When you meet with your attorney. since it is usual for a private attorney to charge a fee for services rendered.) What are savings account balances considered to be? _______________________________________________ ("Savings" are your money. and correspondence. You always have the option of taking your legal problem to a private attorney. Those well versed in legal matters will advise that the best advantage you can give yourself in any legal situation is the sound. records. You've covered a lot of information so far. be sure to visit your legal assistance office before trying this route. Private attorneys with private law firms. _______________________________________________ b.Note: A legal assistance officer is a licensed attorney. including documents. Stop to review some key points. b.) Does the legal assistance office have licensed attorneys? _________ (Yes.) 1-10 . professional counsel of a lawyer. they are assets. _______________________________________________ (Two legal assistance agencies available to help are the Staff Judge Advocate (SJA) and private attorneys. What are credit card balances considered to be? _______________________________________________ (Credit card balances are liabilities.) Name the two legal assistance agencies available to help you and your family. the legal assistance office has licensed attorneys. However. though not always licensed in the state where stationed.

So. Trusts. Will. You may use your legal assistance office since it is free or pay a civilian lawyer. it's especially important for both you and your spouse to each have a will. When this occurs. Have this person confer with your lawyer to get a clear idea of an executor's responsibilities and have any questions answered. Let's look carefully at what a will is and does and then at some precautions and guidelines for drawing one up. it's their last chance to tax the deceased! Besides avoiding taxes. The beneficiary is usually an individual. If you die without a will. After you have selected a lawyer to help you draft your will. Drawing Up a Will Every Marine should have a current will that legally specifies the distribution of assets in case of death. Ask yourself if you would want this person to step in and take charge? Think about it! Note: Most people appoint their spouse as the executor. Whatever expense and bother you incur for the preparation of even a simple will could be very worthwhile and perhaps even pay large dividends when it's time to settle your estate. there are other reasons why disposing of your estate according to a will instead of state law is better. a probate court will divide your property according to state laws. you can often do more harm than good by writing it yourself without the benefit of legal guidance. Remember.1204. to repeat the definition of a trust in a slightly different way. You must keep in mind that there is a possibility of both spouses dying simultaneously. Not only does this reinforce the need for both spouses to have a will. then you have died intestate. Further. most states are very interested in collecting estate taxes. Imagine that you are not able to handle your affairs right now because of a serious medical problem. This should be someone you trust and someone who has agreed to administer your will. But. For instance. Since a will is a legal document. This is true regardless of how little he or she owns! If you're married. A will may save your survivors a small fortune in estate or death taxes. It can be very short and simple or very complex and many pages long. What exactly is a will? A will is a legal declaration of how a person wishes his or her possessions to be distributed after death. this is not always the wisest choice. the person you select is going to decide your affairs after you are deceased. b. it is a legal arrangement where the beneficiary has been designated by the grantor to receive the benefits of the property 1-11 . This is the person who will "execute" or carry out the directives of your will when you die. it is not wise to select your executor based on sentiment. but to appoint someone else as executor too. you will next need to choose an executor. After all. A will clearly stating your wishes could save your loved ones the trouble and cost of repeated court trips and legal fees. but it can be an estate. disposal of your estate according to state law could cause serious financial problems and hardships for your survivors. A trust is an agreement which a person (grantor) makes arrangements to give his or her property/assets to someone else (trustee) to manage and administer for the benefit of a designated third party (beneficiary). a. While intestate laws vary from state-to-state.

you cannot change it. As we have said before. Now you are in a position to observe and evaluate the trustee's performance and skill in managing the trust assets. because sometimes those tax savings may not be enough to justify the added expense of setting up the trust. a bank. Only careful preparation and drafting can ensure a sound trust. Don't postpone the preparation of your will--tomorrow may be 1 day too late! (2) (3) (4) 1-12 . you have the choice of making it revocable or irrevocable. you can revoke the trust or appoint another trustee. Don't make changes by marking out some information and writing in new information without getting legal advice. When a living trust is created. Seek sound legal advice. However. so it is important to make sure yours is drawn up by a lawyer who knows the pitfalls to avoid. a will (or a trust) is a specialized legal document. or a trust company. Keep in mind the precautions listed below when planning your will: (1) Don't write it yourself unless you're a lawyer. A revocable trust can be changed or canceled as you wish. (1) (2) Living Trust is a trust that takes effect while you are still alive. If you are not satisfied with the results. Testamentary Trust can be created after your death by your will or your "last will and testament. Trusts can be quite complicated. It is possible that if you omit a single word or phrase you could cause your survivors considerable problems and unexpected costs. Imagine that you have named a third party as trustee to a trust. Guidelines for drawing up a will. c." as it is sometimes called. and you can often do more harm than good by writing it yourself without the benefit of legal guidance. This kind of do-it-yourself rewrite of a will could invalidate the document entirely. but a living revocable trust has a distinct advantage. contact your legal assistance office. Sign only the original copy of a will. You may even have your own outline or rough draft of your will for your lawyer to use. have your records in order and decisions made before seeing the lawyer. The trustee may be an individual. All trusts have certain advantages and disadvantages. Be sure to choose someone you trust. once an irrevocable trust is established. An important factor for you to examine when creating a testamentary trust is possible income and estate tax savings. There are two basic types of trusts.being managed and administered by the trustee. For guidance concerning trusts. Since lawyers generally charge by the hour.

Definition and purpose. sign only the original copy. ________________________________________________________ (The four guidelines are don't write it yourself. Do you remember four guidelines to follow when you draw up a will for your family? a. or separate. ________________________________________________________ c. The birth or death of an immediate family member or loved one. Now for a quick review! You've looked at what a will is and how important it is to have one. don't make changes without legal advice. The executor named in your will dies or can no longer be considered competent. Therefore. Note: A power of attorney is mandatory for all Marines in case of deployment. While having a will or trust is very important.(5) Review your will from time-to-time and have it updated as necessary to reflect the changes in your life. you need to have someone you trust sell it for you. you are being deployed next week. and will act as your "attorney-in-fact. choose someone you trust when you grant power of attorney. for example. Again. 1-13 . Consider changing your will or trust. ________________________________________________________ b. From time-to-time. legally arrange to give your substitute person a "power of attorney. Power of Attorney a. A guardian for a minor child is named or a new one is appointed. You change your legal residence. and don't postpone the preparation of your will. upon the following life events: (a) (b) (c) (d) (e) (f) The value of your assets changes substantially. For example." which is a written document transferring your legal authority to another person in the terms you set forth. This person will be your agent." To do this. divorce. You marry. remarry. as well as your personal circumstances. ________________________________________________________ d.) 1205. most people will face some situation in which they are unable to be present for a legal transaction. you want to sell your car but you won't have time to do it before you leave. make sure to keep it current. Keep in mind that tax laws change. will be present at necessary transactions.

A U. Because of problems like these. Keep in mind that all agencies providing assistance are very busy operations. Since the acts of your "attorney-in fact" are legally binding. often when it is inconvenient or impossible for you to be present. An angry spouse or family member who had earlier been given power of attorney could exact revenge by emptying bank accounts or selling property. c. These are ideal times to have granted a trusted person back home your power of attorney. You may also prefer to frequently renew a power of attorney rather than grant a single one for unlimited or very long duration. Drafting a special power of attorney for a limited time and specific events can narrow this danger. both the power and the time are limited. Lesson Summary. We discussed how to obtain and keep important papers and how to plan your estate. many people. (1) The first danger is there is always the possibility the person assigned with your power of attorney will be negligent or even malicious and abuse the power. will not accept a power of attorney. There are basically two types of power of attorney: (1) (2) General gives broad power and authority. Legal situations can arise at any time. d. (2) The second danger is that. it is extremely difficult to revoke a power of attorney. use a legal assistance agency. The dangers of executing a power of attorney. Example: Marital or family problems could occur. As you can see you must total your assets and liabilities to understand your overall financial status. You could be on leave. there are two dangers to consider before giving someone power of attorney. When a power of attorney is needed. Special (or limited) gives power confined to the specific act(s) described or for a specified time frame. The dangers of a power of attorney can be limited by giving a special power of attorney instead of a general power of attorney.b. Types. Marine needs a power of attorney more than most people.S. once arranged. or away on TAD orders. especially in real estate transactions. In a special power of attorney. To help you with these important legal matters. Because of these dangers. involved in permanent change of station (PCS) orders (especially while moving overseas). it is obvious that a power of attorney should not be drawn until a legal assistance officer or a civilian attorney has been consulted. So call ahead and make an appointment! 1-14 .

_____________________________________________________ 5. Define "asset. Identify who will first provide assistance in locating important papers. What are the three categories of important papers? a." _____________________________________________________ _____________________________________________________ 6.Study Unit 1 Exercise: Complete items 1 through 9 by performing the action required. _____________________________________________________ 2. Define "liability. _____________________________________________________ c. a. _____________________________________________________ 3. 1." _____________________________________________________ _____________________________________________________ 1-15 . Check your responses against those listed at the end of this study unit. List suggested safe storage areas for your important papers. 4. _____________________________________________________ b. The one place that is inappropriate to duplicate your personal papers is _____________________________________________________. _____________________________________________________ c. _____________________________________________________ b.

Then. 3. a. 4. Finally. _____________________________________________________ 8. Financial b. List two sources available for legal advice. you described a power of attorney and how you may need to use one in your legal transactions when you cannot be physically present. ____________________________________________________ ____________________________________________________ 9. you were encouraged to take an inventory of your personal assets and liabilities. and how important it is to store them in a safe place. to consult with a legal assistance agency for professional guidance. 1102 1103 1104 . where to make copies. Special safe b. _____________________________________________________ b. Lawyer's office c. State the purpose of a power of attorney. ____________________________________________________ ____________________________________________________ STUDY UNIT 1 SUMMARY This study unit identified your important papers and discussed why each is important. and then to seriously consider planning for your estate using either a will or a trust.7. You discovered where you could find missing papers. Safety deposit box 1-16 1101 2. Study Unit 2 will introduce you to Government Issued (GI) and VA benefits and retirement pay systems. Personal records Legal assistance office personnel Government office copier a. State the purpose of a will. all of which are special assets for you in military service. Study Unit 1 Exercise Solutions Reference 1. Entitlement c. a.

1201 1202 1203 1204 1205 1-17 . 7. continued Reference 5. A power of attorney is a written document transferring legal authority to another person in the terms you set forth. Something of value which is owned Legal responsibility to pay a debt a.Study Unit 1 Exercise Solution. Private attorneys A will is a legal declaration of how a person wishes his or her possessions to be distributed after death. 9. 8. 6. Staff Judge Advocate (SJA) b.

Veterans Administration (VA) GI benefits. 2101. This study unit will devote a lesson to each of these special benefit programs and describe its financial value to you. However. car payments. You will see definitions to common insurance terms and discussions of different insurance options that are available outside of government-sponsored programs. yet they would still have to pay rent. This information may help you make appropriate choices when buying civilian life insurance. Your death would deprive your family of your income. credit card bills. Why You Need Life Insurance Arranging for life insurance coverage now may seem unimportant. 3. At first. Match insurance terms with their correct definitions. LIFE INSURANCE OPTIONS Most people jump into a policy without having enough information about insurance. Identify a description of a whole life insurance policy. and medical expenses. 2. But think about those who rely on you financially. This lesson will help you understand general life insurance and the benefits available to you from your Serviceman's Group Life Insurance (SGLI) and Veterans Group Life Insurance (VGLI) military insurance. Lesson 1.STUDY UNIT 2 MILITARY BENEFITS Introduction. Identify a description of the Veterans Group Life Insurance (VGLI). 2-1 . and special retirement benefits? These programs have generous provisions. Do you know how lucky you are as a Marine to have service-sponsored life insurance. Identify a description of the Servicemen's Group Life Insurance (SGLI). before planning how to use these programs to optimum advantage in your personal life. 4. digesting all the details of each program can be overwhelming. Identify a description of a term life insurance policy. Life insurance provides the financial cushion that allows your loved ones to adjust financially to life without you. 5. LEARNING OBJECTIVES 1. you will need to digest the details and consider your needs. They also do not reevaluate their insurance coverage as their circumstances and needs change.

2-2 . Think of your insurance needs in these terms. maintaining adequate insurance is especially important. you will want to carefully provide for your family in the event of your death. and beneficiary Term and whole life insurance Grace period and lapsed policy Face amount and cash surrender Policy loan Annuity Participating policy Rider Settlement option Accidental death benefit The definitions that follow are meant to help you understand these terms so you can begin to use them comfortably. a. Language of Life Insurance While some companies are beginning to issue policies with simplified language. b. Term insurance usually costs less than other types. monthly. Some people buy financial protection for their retirement years. c. Here are some of the common terms you will be seeing in this study unit: Policy. or yearly. There are many types because the amounts of coverage and premiums change based on the age of the insured and the period of time (term) of coverage. Premium. most policies remain hard to understand because the insurance industry seems to have a language all its own. Provides protection only for a specific period (number of years) at a certain cost. Beneficiary. Depending on the terms of the policy. For those in the military. The amount of payment for insurance coverage paid by the policyholder to keep a policy in force. Policy. premium. ACTIVE SERVICE INSURANCE BLOCK SEPARATION INSURANCE BLOCK RETIREMENT INSURANCE BLOCK 2102.Most people buy life insurance to provide financial protection for their dependents in the event of their death. The face amount of the policy is only payable if death occurs. As a responsible. The person who is to receive the insurance proceeds when the insured dies. the payment could be made weekly. You will read about them in the next few pages. Term insurance. d. A written contract or certificate issued by the insurance company that dictates the terms of the insurance. thoughtful Marine. no matter how remote it may seem today.

the beneficiary could receive the money as a lump sum or as periodic payments over a time span. Generally.000 to the beneficiaries if there was a $5. Cash surrender value. Face amount. k. a policy with a face amount of $15. Although sold by insurance companies. A loan made by the insurance company to the policyholder. The money to be paid upon voluntary termination of a policy by the policyholder. (An "accidental death benefit" is often referred to as a "double indemnity" clause. which means it does not pay a face amount to a beneficiary at the death of the insured. An investment yielding fixed payments beginning at a certain time in the policyholder's lifetime.participating policy. m. The premium is higher than that of a non. l. i. Rider.000 would only pay $10. o. The choice a policyholder or beneficiary makes concerning the way benefits are paid on an insurance policy. the policyholder is betting that he will live a long time and receive many payments.) 2-3 . n. j. Annuity. A policy that has terminated because premium payments to keep the insurance policy in force were not paid. Participating policy. For example. g. Policy loan. A set period of time during which overdue payments may be paid without penalty and the insurance coverage remains in effect. Lapsed policy. The amount paid might be decreased by the amount of any policy loans. Grace period. This type of insurance is initially more expensive than term insurance but premiums remain constant. The premium is set high enough to build cash value that can be passed on to the policyholder as dividends. For example. an annuity does not provide insurance. Provides protection (and keeps its annuity value) for the entire life span of the insured person.000 policy loan outstanding. the face amount that would be paid upon the death of the insured person is decreased by the amount of the loan until it is repaid. The cash surrender value is always less than the face amount of the policy. The amount of money stated on the policy to be paid upon the death of the insured person. h. Accidental death benefit.e. An addendum the insurance company can attach to your life insurance policy. Settlement option. With an annuity. f. An added policy provision for payment of a special extra benefit in case of accidental death. Whole life insurance.

Does not build cash value. Any individual or legal entity can be designated the beneficiary. Continues to provide insurance protection for 120 days following separation from active duty. it is not mandatory. at $.Take a moment to see if you remember what you've read by answering the following question. Although SGLI is probably a better deal than civilian policies. in writing.000 can be requested.90 per $10. How much does SGLI cost you per month? ____________________________ (SGLI costs $. you can convert your SGLI coverage to Veterans Group Life Insurance (VGLI) without taking a medical examination. (Term insurance is defined as protection only for a specific period (number of years) at a certain cost. Additionally.000 of coverage).90 per $10. coverage for less than $200. Servicemen's Group Life Insurance (SGLI) ACTIVE SERVICE INSURANCE BLOCK SEPARATION INSURANCE BLOCK RETIREMENT INSURANCE BLOCK Remember the chart shown at the beginning of this lesson? SGLI fills the first block. which represents your active service timeframe. you may so indicate on the SGLI application form. It was created to cover all active duty personnel and has the following features: Provides term life insurance to cover a serviceman's military years. If you choose not to accept SGLI.000 of coverage. The government-sponsored SGLI program was created in 1965 to provide term insurance to all active duty personnel to cover their military years in a group plan. 2-4 . Premiums depend on the level of coverage desired. During this period. Term insurance is defined as _________________________________________________. Proceeds are payable to the beneficiary as a lump sum or in 36 equal payments.) 2103.

Can you remember which periods of time during and after service your SGLI and VGLI insurance covers? SGLI ________________________________________________________________ VGLI ________________________________________________________________ (SGLI covers the period of time when you are in the military and for 120 days afterward. Payments are sent to the Office of Servicemen's Group Life Insurance (OSGLI) in Newark. and VGLI covers from the 121st day after your separation and is renewable every 5 years for the rest of your life. (Renewable every 5 years thereafter. Coverage begins on the 121st day following military separation and lasts up to 5 years.) Premiums range from $12 to $450. Payments for VGLI coverage are made by you and sent directly to the Office of Servicemen's Group Life Insurance. Veterans Group Life Insurance (VGLI) ACTIVE SERVICE INSURANCE BLOCK SEPARATION INSURANCE BLOCK RETIREMENT INSURANCE BLOCK The VGLI is an opportunity to extend your previous SGLI coverage.2104. Your VGLI program is designed to go into effect on the 121st day following your separation. so VGLI transitions from the active service to the separation timeframe block. NJ. VGLI has the following features: It's an optional term insurance. depending on age and level of coverage.) 2-5 . The face amount is based on and limited to the amount of coverage carried under SGLI. thereby providing continuous insurance protection. You then have the option to renew every 5 years through your life.

Remember the definition for term insurance: It provides protection for only a specific period of time (number of years) at certain cost. The face amount of the policy is only payable if death occurs. his insurance coverage will have decreased to approximately $50. The increase in premium cost is the insurance company's way of addressing the increased risk that the company faces in providing $100.000 of insurance coverage for someone who is 50 versus someone who is 35. Example: The same 35-year-old nonsmoking male will continue to pay $173 per year. Whole life insurance companies also include a savings element called cash value. if the company deems you an unacceptable risk. Example: A $100. or throughout your "whole life.provides a reduced amount of coverage for the same premium cost at each renewal. b. however." Premiums remain at a fixed rate and there is no change in the amount of insurance coverage for the entire lifespan of the policyholder. Decreasing term . a.000. 2105. 2-6 . you should be familiar with other types of life insurance. Comparison of Term and Whole Life Insurance Policies While whole life and term insurance are the basis for virtually all forms of life insurance.ACTIVE SERVICE INSURANCE BLOCK SEPARATION INSURANCE BLOCK RETIREMENT INSURANCE BLOCK Government-sponsored SGLI and VGLI programs are good. Your term policy limits coverage to a specific period of time. there are other types of insurance that combine the features of term and whole life insurance.000 level-term policy for a male nonsmoker might cost approximately $173 a year at age 35 and $443 per year at age 50. but you may want to supplement your SGLI or VGLI coverage. There are two general types of term insurance: Level-term . To do so. As you get older. The insurance company can also decide you are no longer eligible for their coverage. Your whole life policy provides the maximum amount of protection against your death for an indefinite amount of time. but by the time he is 50 years of age. at the start of each renewal period the cost of the insurance increases. you may pay more for that coverage or the coverage may be for a smaller amount. especially when your retirement or separation draws near or as your life circumstances change. You may borrow against the cash value of your policy.the amount of insurance coverage remains the same over each renewal period.

You see. If you get professional guidance to help you understand the details of different plans under these two basic types. if you were to buy that same amount of coverage as term insurance. So. This is a type of term insurance policy that builds a cash reserve account similar to the cash value associated with whole life insurance. a new "case" for them to evaluate at the beginning of each new term. whole life and term. there generally will be no change in the amount of premium you will have to pay. Universal life. This means you become. With a universal life insurance policy. the insurance company could decide you were no longer eligible for their coverage. 2-7 . in effect. you will be able to design a basic life insurance program most appropriate for your personal situation.) These two basic types of coverage. as you got older you would pay more for that coverage or the coverage would be for a shorter period. no change in the period between payments. a. the policyholder has the option of choosing either a fixed amount of death benefit to be paid to his or her beneficiary (the actual face amount of the insurance coverage) or a death benefit that increases (the face amount of the insurance coverage plus the cash value of the policy). with term insurance the company underwriters (who determine the acceptability of risks) adjust standards as insurance conditions change. Then.The comparison is easiest to understand when you first look at the way whole life works. General Types of Insurance Policies Following are general types of insurance policies that are either term policies or combinations of term and whole life policies. no matter what happens to you! But. structure virtually all forms of life insurance. after you've set up your basic plan. When you buy a certain amount of whole life at a certain price. then choose according to your personal needs. Then. the additional premium amount is allowed to build up for the policyholder. After the insurance company deducts its administrative expenses. and no change in the amount of insurance coverage you will have for the rest of your life. 2106. In fact. you can explore ways to modify or increase that coverage. you now understand that there are benefits to whole life coverage too! Do you remember what kind of life insurance is purchased for specified time periods? ________________________________________ ("Term" insurance is purchased for specified time periods. while term insurance looks great at the beginning because it is cheaper. the amount of premiums you pay is more than the actual cost of the term insurance.

There are participating and nonparticipating features in different types of permanent policies ranging from whole life to retirement insurance. Variable life. Permanent (cash value). The cash value of the policy is paid to the policyholder in cash should he or she decide to surrender the policy. Here are some of the ways this policy can be used: For loan purposes with the insurance company or a bank (the policyholder must pay interest on the loan to replace the cash value of the interest the company would have earned on that money if they had invested it themselves). This is a form of permanent insurance where a portion of the amounts you pay as premiums is invested and the death benefit can "vary" by going higher than the original amount (depending on the earnings from your investment). the cost of a universal life policy will increase as you get older. d. Annuity and endowment. f. by changing the period of coverage. The policyholder may "adjust" coverage by increasing or decreasing it as his or her needs increase or decrease by changing the amount paid as a premium (within certain limits). Adjustable life. or pay a specified amount to your beneficiary if you die before then. Whole life is also "permanent" (providing the same coverage for life) and you usually pay the same premium as long as you live. This insurance provides the same coverage for the entire life span of the insured person. c. However. or even by switching coverage between the term and permanent life insurance aspects of a policy. e. This cash value reserve can be used to borrow against for emergencies. to pay off a mortgage. Ordinary whole life. You are learning a new but very important language! 2-8 . Payment of income tax on this cash reserve is deferred until the cash value is actually withdrawn. This type of policy protects through a combination of term and permanent coverages. or can be used to provide increased death benefits to the insured person's beneficiaries. These pay a lump sum or income to you if you live to be a certain age. for retirement income. b. although some whole life policies let you pay premiums for a shorter period (such as 20 years or until age 65).There are some special features to universal life insurance policies: The policyholder may pay premiums at any time in virtually any amount (up to certain levels). because it is term insurance. Sorting out the differences between these types of insurance policies can be very confusing.

Covers whole life span. Pay a lump sum or income to policyholder who lives to a certain age or after a certain amount is paid (or pays a beneficiary). Policyholder can pay premiums at any time in any amount (with limitations). Table 2-1. What "varies" could be the amount of death benefit or profits from the portion of the premium invested. The policyholder usually pays the same premium throughout the life of the policy (although sometimes he/she can arrange to pay a specified amount for a specified period of time). ORDINARY PERMANENT ADJUSTABLE VARIABLE ANNUITY AND ENDOWMENTS 2-9 . The increase can be borrowed against or paid to the beneficiary. Characteristics of Insurance Types TYPE UNIVERSAL FEATURES Cash reserves build from the amount you pay over the premium. Income tax is deferred until the cash is withdrawn. Premium can be borrowed with interest or paid to the policyholder upon surrender of the policy. Policyholder can "adjust" coverage to meet his/her needs by increasing or decreasing the premium amount or period covered.The chart below will help you review the main differences between the various types of insurance.

c. the profits from this and/or the death benefit can vary. ___ 3. (1. Variable Permanent Adjustable d. ___ 4. ___ 2.Match each insurance type from column I with its special feature from column 2 by writing the letter of the special feature on the line before each type. a) 2-10 . Column 1 Type ___ 1. Column 2 Special Feature a. b. d. Covers whole life span. 3. 2. Ordinary Universal b. ___ 5. e. e. 5. Owner can increase or decrease (whole) coverage. Because part of the premium is invested. Usually pay same premium for life (or for a specified time period). c. Builds cash reserves from amount paid over the premium. 4.

marital status. If your insurance company has incorrect information about you in their files that resulted in your being turned down for insurance. read the policy and understand the coverage you are buying. etc. An advantage for using an agent is the insurance company must honor everything the agent promises you. Use "A-rated" companies only! The amount of insurance you need depends on your situation. Make sure you consider the information in Table 2-2. An agent represents the insurance company. An advantage for using a broker is that he or she can help you compare many different policies and represents you. If it is. Evaluate your needs Read the free Federal "What You Should Know About Life Insurance" is a free publication government available quarterly. Choosing the Best Insurance Policy Before buying insurance. how old you are. number of dependents. b. Know the insurance company's rating Insurance companies are rated by independent rating services. Insurance Purchase Considerations Know your insurance Make sure your insurance company is licensed with the state. but you must pay the premium for the time the policy was in force. income. publication CO 81009. A broker sells a wide range of products from many companies. be aware that there are two types of insurance professionals: agents and brokers. Pueblo. Also. ask how it will be used. A disadvantage is the agent can help you with just one company's policies. Table 2-2. not the interests of the insurance company. Insurance professionals can give you general guidelines about your rights when buying insurance. You can cancel or lapse a policy at any time. make sure it is corrected. rights the insurance commission can be helpful if a misunderstanding or dispute occurs between you and the insurance company. a. If your insurance company collects personal information about you. the consumer. Your insurance broker or state insurance commissioner can give you the rating. A rating of "A" or better (A+ or A++) indicates financial stability and that the company is good on paying claims. A disadvantage is the insurance company is not bound by the promises the broker makes to you. 2-11 . Contact: Consumer Information Center. such as Best's Insurance Reports (available in most libraries).2107.

Call at least three insurance agents. Purchase more than one kind of insurance from the same company (automobile. Make sure to ask each agent the same questions. renters. Since there are many factors involved in projecting the future economy (like inflation and recession) and one's future employment. Compare rates. there cannot be any fixed formula for determining the amount of life insurance a person should have--but. or common sense. ask about discounts and special rates. Carefully consider the reasons for adding riders or floaters to your coverage. you could take one of the following approaches: multiple earnings. take care of your health. 2-12 . picking a life insurance policy is a multifaceted problem. Table 2-3 will help you review the main differences between the various types of insurance. needs. Read sources of information such as Consumer Reports. Decide how much life insurance you need.2108.) Do not smoke. As you can see. Make sure your policy is guaranteed renewable. homeowner's. Determine the Amount of Life Insurance You Will Need Here are some money-saving tips: Shop around. etc.

000 (Answer: d) 2-13 . The worksheet provides an outline for developing insurance requirements under the "needs" approach and explains the eight steps involved. (See the worksheet on page 2-14.000 outstanding mortgage. you purchase the amount of life insurance you need. two children in high school. You have an outstanding mortgage of $63. Differences Between Insurance Formulas APPROACH Multiple Earnings DESCRIPTION Under this model the required amount of life insurance is a direct function of the insured annual income. $125. $201.) Common Sense Calculates the future financial expenses of your family (like car.Table 2-3. $100.000 125.000 for each child living at home. Use the life insurance calculation worksheet on page 2-16 to estimate your current and future insurance needs using the common sense approach. education). One version of this approach multiplies current earnings by a factor of five and increases that amount by the value of the unpaid home mortgage plus $50. BAH) of $5.000 b. it produces an estimate specifically tailored to an individual's situation. Based upon these expenses.000 This technique of estimating insurance requirements examines the financial situation of the insured and considers other resources that may be available. EXAMPLE: A member with a spouse.300. monthly gross income (base pay.000 c.100. While it takes more effort than the multiple earnings method.000 100.000 d.000 $531. BAH) of $2.100 x 12 x 5 = Outstanding Mortgage Balance Children: $50. Required insurance: Salary: $5.000 and a monthly gross income (base pay. Using the multiple earnings approach. $138.000 x 2 = Total Insurance Requirements Needs $306. $170. Try this situation to see if you remember how to calculate your insurance needs based on the multiple earnings approach: Situation: You are a sergeant with a spouse and no children. how much life isurance would you carry? a. house.

your first concern about their financial Other than to immediately increase the amount of your life security well-being is satisfied. above) LESS: Total Expenses Upon My Death (from Section 2.INSURANCE WORKSHEET (Needs Approach) Step No. month-to-month living expenses. above) Excess Income Available Or Shortage (if shortage. if the computation shows that your survivors $__________ will not have enough immediate cash available to cover their expenses. they will be in deep trouble and you'll need to take If the above "Income Minus Expenses" computation indicates immediate actions to ensure their financial security. Special Expenses (not continuing financial needs) Executor's Fund (Count of $5. Total Income Available to Survivors (from Section 1. _______________ Other Sources of Income (explain) From ___________________ From __________________ From _________________ From __________________ Total Income Available to Survivors $___________ $___________ $___________ $___________ $___________ $___________ $___________ $____________ $____________ $____________ $____________ $_____________ Step No. 3: Reconciliation of Family's Immediate Income Versus Immediate Expenses. show here in brackets) Step No. 2: Expenses of My Family When I Die. This will be the next greatest concern you will face. $___________ On the other hand. but remember.000) Emergency Expenses (Count on $5.000) Auto Loans to be Paid Off Other Loans to be Paid Off (explain) For:_______________________ For:______________________ For:_____________________ For:______________________ Other Expenses (explain) For:_____________________ Total Expenses Upon My Death $__________ $__________ $__________ $__________ $__________ $__________ $__________ $__________ $__________ $__________ $__________ $____________ Step No. 1: Income for My Family When I Die. Determine the amount of income survivors have available: Military Death Gratuity Pay Back Pay and Allowances VA Death Benefit Payment Social Security Death Benefit Proceeds of SGLI/VGLI Insurance Policy No. unless you have investments. this only covers their insurance. immediate expenses-it does not provide for a continued source of $___________ income for their day-to-day. Type Insurance Name of Insurance Company Beneficiary Face Value 2-14 . ________________ Policy No. there are very few actions you can take to provide a source of immediate funds. Policy No. that your family's income is enough to cover the immediate expenses they will face.000) Home Mortgage Payoff (1st Mortgage) Home Mortgage Payoff (2nd Mortgage) Funeral Expenses (Count on $5. 4: Information on Family's Insurance Policies Already in Force.

as well as the needs of your survivors after you are gone. (From Section 6 above) $___________ Excess Income Available or Shortage On the other hand. if any. Comments & Points to Check: ____________________________________________________________________________________________________________ ____________________________________________________________________________________________________________ ____________________________________________________________________________________________________________ ____________________________________________________________________________________________________________ ____________________________________________________________________________________________________________ 2-15 . Step No. your insurance needs might very well decline. Family's Monthly Living Expenses." it is better to be safe than sorry! At the end of this study unit. Rent Payment: $________________ Mortgage Payment $________________ Electricity/Gas Payment $________________ Telephone Payment $________________ Food $________________ Clothing $________________ Entertainment $________________ Transportation $________________ Loan Payments (explain) $________________ For: ________________________ $________________ For: ________________________ $________________ For: _______________________ $________________ Other Expenses: For: _______________________ $________________ For: _______________________ $________________ For: _______________________ $________________ Total Monthly Living Expenses $________________ Step No. it might be prudent to re-read this section of the lesson and take another look at your requirements. Determining How Much (If Any) Insurance You Need.and you could be "gone" tomorrow! immediate concern regarding their financial security should be at ease. you will find different methods of determining how much. Payments $___________ VA Pension $___________ VA Benefits (explain) For Spouse: $___________ For Children: $___________ For Parents: $___________ Social Security Benefits: For Spouse: $___________ For Children: $___________ For Parents: $___________ Other Income (explain): For: ________________________ $___________ For: ________________________ $___________ Total Monthly Income for Family $___________ Total Monthly Income for Family $___________ Step No. If this is the case. 7. Notes. The quickest and least If the above monthly "Income Minus Expenses" computation expensive way to accomplish this is to immediately increase indicates that your family's monthly income (after your death) your insurance. 5: Family's Monthly Income From: Surviving Spuse's Salary $___________ Survivor Benefit Plan Payments $___________ Dependency & Indemnity Comp. you might find yourself in the fortunate position of having enough insurance to satisfy your present financial needs. 6. if the computation shows that your survivors (If there's a shortage. your you are gone . After the above computations. your family is indeed fortunate to have someone who cares so very much about their protection.INSURANCE WORKSHEET. Reconciliation of Family's Monthly Expenses Versus Monthly Income. show the will not have enough monthly income to cover their expenses. inflation.) $___________ will surely be in deep trouble and it is time to take immediate action to preclude this from happending. Little can be done to protect your family after is enough to cover their anticipated monthly expenses. As your income level increases and you are able to place more money into sound investments which provide you the financial security you seek. you might have determined that the amount of life insurance protection you are presently carrying will be insufficient to provide your family with the financial protection they will need and deserve. insurance you need. and the death of other family members. Total Amount of Monthly Income for Family While it appears they will be provided for. 8. they should have an (From Secion 5 above) $___________ income "cushion" to guard them against emergencies. By the same token. Total Amount of Monthly Expenses disasters. (Continued) (Needs Approach) Step No. After reviewing the income and expenses your survivors would incur. But until you reach that "safety net. they amount in brackets.

IRA. mutual funds. bonds. etc. NEEDS Immediate Expenses Funeral Costs Uninsured Medical Costs Estate Settlement Costs Long-Term Needs Emergency Fund Repayment of Debts Family Living Expenses $__________ Homemaking Expenses (child care. house and lawn care. & Keogh plans) Social Security Survivor Benefits (monthly amount X # months) Other INSURANCE CALCULATION Total Needs Total Assets Life Insurance Needed AMOUNT $__________ $__________ $__________ $__________ $__________ $__________ $__________ $__________ $__________ $__________ $__________ $__________ $__________ $__________ $__________ $__________ $__________ $__________ $__________ 2-16 .) Education Fund Retirement Fund Other TOTAL NEEDS: ASSETS Current Life Insurance Any pension benefits $__________ Cash and Savings Equity in real estate (if it is to be sold) Investment (stocks.INSURANCE WORKSHEET (Common Sense Approach) Directions: Use this worksheet to estimate how much insurance you need.

How many steps are in the needs approach? a. You will cover these topics in the next lesson.) Lesson Summary. 4. LEARNING OBJECTIVES 1. 4 c. The system is meant to be attractive enough to encourage retention of highly qualified individuals to meet the military's needs. Identify the system that authorizes medical care for active duty. Identify the free hospital care facilities for Department of Defense (DoD) eligible persons. As a Marine. The military provides for the well-being of those who have served faithfully. Identify the person to contact to enroll your dependents in the Family Members Dental Plan (FMDP). insurance is an important consideration in your financial planning. the timeframes of your SGLI and VGLI coverage. 5. the typical options included in private insurance policies that you'll need to investigate as your separation or retirement draws near. -----------------------------------------------------------------------------------------------------------------Lesson 2. 8 d. As you can see. Identify the system that brings together the health care delivery systems and the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS). Identify the person whom most military hospitals employ to assist active duty and their dependents in using health care benefits. combat-ready force by rewarding those who have served their country and providing them with benefits and retirement pay based on their service. and their dependents. and the three approaches you can take to determine your insurance needs. 3 b. you are entitled to many financial benefits. Another important consideration is health and dental care for your dependents. 2-17 . MILITARY HEALTH BENEFITS Military benefits are based on the need to maintain an effective. 3. In this lesson you learned to talk the language of insurance. retired military. 10 (Answer: c. 2.

HBAs are consultants. or marriage). Active and retired members are listed automatically. Defense Enrollment Eligibility Reporting System (DEERS) DEERS is a computerized data bank maintained by DoD. 2-18 . in California call 1-800-334-4162. Hawaii. Fortunately. divorce. Just like everything else. Health Care Benefits Health care costs are drastically increasing. but not impossible to use. Questions regarding DEERS enrollment can also be directed to the DEERS Beneficiary Telephone Center at 1-800-538-9552. the more you know about how your health care services work. Important papers needed for DEERS enrollment are: birth certificate and social security number. Health Benefit Advisors (HBA) To assist you and your dependents in using the health care services. and may have no authority to make benefit determinations or to obligate funds. birth.2201. in Alaska. 2202. almost every military hospital or medical facility employs HBAs. but members must initially report their dependents and any subsequent changes to dependent status (for example. PRIMUS and NAVCARE clinics and Tricare claims processors all use the system to verify specific eligibility. Registration in DEERS is absolutely critical to maintaining your official record of eligibility for health care treatment. but are not responsible for Tricare policies and procedures. you and your dependents are covered for both general medical and dental care. from your active service through retirement. or Puerto Rico call 1-800-527-5602. Its purpose is to serve as the official record of eligibility for individuals receiving uniformed service benefits. These are the options you have available to you: Health Benefits Advisor (HBA) Military Treatment Facility (MTF) Tricare Defense Enrollment Eligibility Reporting System (DEERS) Family Members Dental Plan (FMDP) The health care services provided to military personnel and dependents are complicated. the better you will be at using the systems. 2203.

Annual deductibles under Tricare Standard and Extra are E-4 and below: ` E-5 and above: $150 for one person $300 for two or more $50 for one person $100 for two or more Beneficiaries should check with their Tricare service center to determine if they need a nonavailability statement which may be required for civilian inpatient care and certain outpatient procedures. Military Treatment Facilities (MTF) MTFs provide free health care services for DoD active duty personnel. All other DoD beneficiaries receive care on a space-available basis. will remain eligible for care in MTFs on a space-available basis. Tricare brings together the health care delivery systems of each of the military services. 2-19 . MTF issues nonavailability statements. and retired military personnel. 2205.2204. Tricare standard is a fee-for-service option which is the same as standard CHAMPUS. which may be required for civilian inpatient care and certain outpatient procedures. their dependents. Tricare introduces to beneficiaries three choices for their health-care delivery: Standard Extra Prime a. and those CHAMPUS-eligible beneficiaries who elect not to enroll in Tricare Prime. in a cooperative and supportive effort to better serve you and your family. and survivors and retired members and their families. as well as CHAMPUS. Tricare Overview Tricare is the DoD regional managed care program for members of the uniformed services and their families. MTFs are opertated by military personnel. All active duty members will be enrolled in Tricare Prime. All Medicare-eligible DoD beneficiaries. First priority is the active duty member.

Pays for 80 percent of the approved or allowable cost. b. The disadvantage to Tricare Extra is it may still be expensive. Space-available care in military hospitals. Tricare Prime benefits: Automatic enrollment for active duty personnel Priority for care at military hospitals and clinics Primary Care Manager provides and guides health care delivery Lowest cost for treatment among the three options Tricare Prime disadavantages: Requires enrollment for 1 year Retirees pay enrollment fee Retirees and their families must elect this option Very expensive to receive care outside Tricare Prime (Point of Service Option) Not available everywhere 2-20 . Is less expensive than Tricare Standard. c. The annual deductible is the same as for Tricare Standard. The disadvantage to Tricare Standard is its expense over all the other options. but at low priority. Tricare Extra benefits: Can choose any doctor in Tricare network. Enrollment is not required. but at low priority. Tricare Prime is an enrolled Health Maintenance Organization (HMO) option that provides guaranteed access to timely medical care. Most convenient when travelling or away from home. Can still seek space-available care in military hospital.Tricare Standard benefits: Greatest flexibility in choosing health care providers. Will pay for 85 percent of the approved or allowable cost. Tricare Extra offers a preferred provider option with discounts. Enrollment not required.

Your Health Benefits Advisor (HBA) can give you updated and detailed information about both programs. This lesson introduced you to the range of health and dental benefits covering your dependents from the time you are actively serving through your retirement.I. depending on type of dental service. Tricare b.2206.) Lesson Summary. Your Health Benefits Advisor (HBA) or FMDP Customer Service (1-800-866-8499) can answer any questions you may have about the extent of your FMDP coverage and guide you through its related paperwork. FMDP (Answer: c. As with Tricare. Low premiums with no deductible. a. These benefits are provided through Tricare and the Family Members Dental Plan (FMDP). active duty Marines are not eligible for coverage since their treatment is free in military dental facilities. FMDP benefits: Covers all types of professional dental services. Participating dentists are monitored to ensure a high level of quality in the service they provide. we will discuss your education benefits both during active duty and later under the G. all military members and their dependents must enroll in ______. Participating dentists will complete and submit your claim at no additional charge. To obtain care in service hospitals or to have claims for civilian health care processed. Next. HBA c. Bill. Family Members Dental Plan (FMDP) Military dependents are covered for dental care through FMDP. These programs can save you money and time as long as you follow their procedures very carefully before getting treatment. DEERS d. Coverage ranges from 50 to 100 percent. 2-21 .

Bill is administered by the Veterans Administration (VA). Bill.I..I. However. Bill benefits. Table 2-4. contact your local education officer or VA representative. you must meet a minimum standard of discharge or separation when you leave the service to return to civilian life. Bill applies to you. Bill. educational costs keep spiraling upwards! The good news is that. Bill Programs The G.. BILL EDUCATIONAL BENEFITS LEARNING OBJECTIVES 1. Bill. Identify the type of discharge that qualifies you for the educational benefits of the G.I.I.I.I. Identify the agency that administers the educational benefits of the G. There are three G. For further information. as a service member. G. Between 1 Feb 1955 and 31 Dec 1976 Between 1 Jan 1977 and 29 June 1985 THEN. Bill. Congress.. You are covered by the Vietnam-era G. The one that applies to you depends on when you entered the service. This means your discharge must be "honorable. Yet. specific conditions apply. You are covered by the Montgomery Bill (Active Duty Educational Assistance Program).I.I..I. After 30 June 1985 Note: This program is available to some Vietnamera veterans still on active duty. the participant must serve for 3 years. 2-22 .I. through the G. You are covered by the Veterans Educational Assistance Program (VEAP). which can help you during or after active service.I. 2. at the same time.Lesson 3. In today's economy. Bills currently in affect. G. Table 2-4 shows which G." To receive maximum benefit. authorized VA to pay tuition costs and some living costs for veterans enrolled in qualified colleges or training schools who maintain successful academic grades. Bill. you have access to a tremendous cost-saving educational program called the G. Three G. To qualify for G.I. 2301. the value of education is obvious. Bills IF YOU ENTERED THE SERVICE.

An individual may also qualify for the full benefit by initially serving 2 continuous years on active duty, followed by 4 years of Selected Reserve service, beginning within 1 year of release from active duty. The participant generally must have a high school diploma or an equivalency certificate before the first period of active duty ends. Completing 12 credit hours toward a college degree also meets this requirement. Individuals who initially serve a continuous period of at least 3 years of active duty even though they were initially obligated to serve less, will be paid the maximum benefit. Benefits under this program generally end 10 years from the date of the veteran's last discharge or release from active duty, but some extenuating circumstances qualify for extensions. Contact your nearest VA regional office for details about your benefits. 2302. G.I. Bill Benefits Table 2-5 compares the three types of G.I. Bill benefits: college/university degree coverage, cooperative training and remedial refresher programs, and tutorial assistance. Table 2-5. Types of G.I. Bill Benefits BENEFIT COVERAGE

College/university degree All or part of the cost for seeking an associate, bachelor, masters, coverage or doctorate degree (including overseas programs). Cooperative training and remedial refresher programs All or part of the cost for business, technical, or vocational courses leading to a certificate or diploma. Training in an apprenticeship program offered by a company. Correspondence courses. Flight training. Individual tutoring (for up to $100 a month) if you enter the school in the middle of the semester or later and if you have a deficiency. Note: Tutorial assistance has a maximum limit of $1,200. Also, the school must certify the specific tutor's qualifications and the hours of tutoring needed. The G.I. Bill can be used for obtaining most types of education or training. However, there are some restrictions.

Tutorial assistance


The G.I. Bill is NOT payable for these types of courses: - Audited courses (or if taken and passed before) - Courses offered over the radio or open circuit television - Courses on subjects such as "bartending" and "personality development" Before you get into the details of using the G.I. Bill, take a minute to review the basic principles of the coverage it gives you, and consider how to apply them to the following question. If you decided to study abroad to learn another language (while learning about another culture at the same time), would the G.I. Bill pay your tuition? ____________________

(Yes, if the course of study would lead to an approved degree. You would need to check with your local VA office for advice.) 2303. General Procedure for Obtaining Educational Benefits Table 2-6 shows the steps to obtain educational benefits. Table 2-6. Obtaining Educational Benefits STEPS 1 2 3 4 PROCEDURE Select an educational program. Consult your VA representative at the regional office with jurisdiction over the state where you will attend school. Fill out the appropriate VA forms. Apply to the school. Once your course of study has been approved by your VA educational advisor and you establish eligibility with the school, you are ready to enroll. Once you start receiving benefits, comply with the standards of the school regarding attendance, conduct, and progress. Keep in touch with the VA to let them know of any changes as you go through your program.

5 6


To review, the six steps to obtain educational benefits are listed below. Step 5 is incomplete. Please complete step 5! Step 1 - Select a program. Step 2 - Consult your VA representative (for the state where you will attend school). Step 3 - Complete the appropriate VA benefit forms. Step 4 - Apply to the school. Step 5 - Comply with ____________________________________________. Step 6 - Notify the VA of any changes.

(Step 5 - Comply with the standards of the school.) Before commencing any educational move, check with your local career planner and then your education counselor to map out a formal educational plan. Check to see if any of your military career experiences (such as attending formal schools or completing MCI courses) will earn academic credit toward a degree. You might be pleasantly surprised! Lesson Summary. In this lesson you learned about the educational benefits of the G.I. Bill, who is eligible; what the restrictions are; and the types of academic, vocational, and training programs covered. In lesson 4, you will learn about other VA benefits--more of your assets as a Marine. -----------------------------------------------------------------------------------------------------------------Lesson 4. OTHER VETERANS ADMINISTRATION (VA) BENEFITS LEARNING OBJECTIVES 1. 2. Identify the two types of disability pensions. Identify when a veteran's spouse would be entitled to burial in a national cemetery.

Regardless of whether you have a family of your own, or if you are currently on active duty, you need to factor several VA benefits into your plans. These include disability benefits, dependency and indemnity benefits, and burial benefits. Further, if you are a married veteran, you will qualify for VA financial aid for your spouse's and childrens' education, as well as a death pension for your surviving spouse.


The amount of this compensation is based on the veteran's percentage of disability. Amounts presently authorized are shown in table 2-7.2401. b. the veteran will usually qualify for monthly disability compensation. After separation from active duty. Table 2-7. VA Disability Pensions There are two types of disability pensions: a. 2-26 . provided he or she was not separated or released under dishonorable conditions. Service-connected disability pension applies if you are disabled by injuries (or by diseases) incurred while serving on active duty. etc. vital organs. limbs. Table 2-8 shows the conditions you must meet to get specific benefits and table 2-9 shows nonservice connected disabilities for which you may be eligible. as determined by the VA. Nonservice-connected disability pension applies if you are permanently disabled for a reason not traceable to your military service. Service-Connected Disability Compensation Percentage of Disability 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Note: Monthly Pension $ 91 174 266 280 542 683 862 1009 1124 1870 A veteran having a 30-percent or higher rate of disability may be entitled to additional allowances for his or her dependents. Additional amounts are authorized for other severe disabilities such as loss of eyesight.

You served at least 90 days during a wartime period. because he meets all three criteria: an honorable discharge. Edward Benson is a retired Marine who was honorably discharged in 1976.Table 2-8. If you die. and a limited income. if necessary. Service-Connected Disabilties CONDITIONS You were separated under honorable conditions. SPECIFIC BENEFITS Pension Note: You must meet all three conditions to earn the pension. The acronym "DIC" stands for "Dependency Indemnity Compensation. He lost his eyesight years ago because of an illness. your surviving spouse and dependent children are eligible for indemnity benefits if you die. or become a POW or MIA Survivors and dependents may receive funds for more than 90 days. unmarried children under 18 (as well as certain children considered "helpless" and those between 2-27 . Death due to service-connected disability (DIC) payments. as a result of military service.) 2402. a. Disability is NOT the result of the abuse of alcohol or drugs. SPECIFIC BENEFITS Monthly compensation after separation from active duty. Table 2-9. Note: Amount of compensation based on your percentage of disability as determined by the VA." DIC payments are authorized for surviving spouses. at least 90 days service during wartime. Dependency and Indemnity Benefits Because you are a veteran. or become disabled education or training. Orthopedic or prosthetic devices provided. He served two tours in Vietnam and now lives on a limited income. Does he qualify for a disability pension? __________________________________________________________ (Yes. You have a limited income. Nonservice Connected Disabilities CONDITION You were separated under honorable conditions. Here is a situation to test your knowledge of nonservice connected disability: Mr.

A disability otherwise compensable under laws administered by the VA. (1) If the veteran was continuously rated "totally disabled" for a period of 10 years or more or If the veteran was so rated for less than 10 years. Death due to nonservice-connected cause. Some surviving spouses and children (subject to the same restrictions as for DIC benefits) can even receive DIC payments of disabled veterans whose deaths were not the result of their service-connected disability. For these benefits to apply. (2) Payments under this provision are subject to offset by the amount received from any judicial proceedings brought on because of the veteran's death. your surviving spouse and ______ are eligible for indemnity benefit payments when you die. DIC payments are authorized for parents of service personnel or veterans who died from an injury incurred in the line of duty. Are they qualified? ______________ (Yes. Note: If death occurred after service.) 2-28 . then he or she must have been rated "totally disabled" for a period of not less than 5 years from the date of discharge from military service. and certain parents of service personnel or veterans who died from one of the following conditions: (1) Disease or injury incurred or aggravated in line of duty or while on active duty for training. Take a moment to review by answering the following questions: Because you are a veteran. An injury incurred or aggravated while on annual training for reserves. (Answer: children/dependents) Situation: Bob and Ellen McDonald are applying for indemnity on their son Patrick who died last January during a training exercise. (2) (3) Note: b. death cannot be the result of willful misconduct. the veteran's discharge must have been under conditions other than dishonorable.18 and 23 if attending a VA-approved school).

) e. Burial Benefits Veterans. A grave marker or headstone is provided and even shipped to the cemetery free of charge by the VA if the veteran's death occurred before November 1990. Eligible recipients. d. a veteran's widow/widower. citizen who served in the armed forces of a government allied with the United States in a war also may be eligible. service members. or an associate of the deceased. It has more limited eligibility than other national cemeteries. Furthermore. Veterans may be buried in any national cemetery. Eligibility for cremated remains in Arlington's columbarium is the same as eligibility for burial in VA national cemeteries. a close friend. parent. A U. Presidential memorial certificate. A veteran can also choose to be buried in a private cemetery. An American flag is made available to drape the casket of an eligible veteran. a certain amount is paid by the VA. minor children and. write to Superintendent. For information on Arlington burials. or an authorized representative acting on behalf of such a relative or friend. a relative or friend (upon request). An eligible veteran must have been discharged or separated from active duty under conditions other than dishonorable. or oldest sibling). Burial in a private cemetery. But. (To arrange for a flag. Arlington National Cemetery is under the jurisdiction of the Army. c.S. under certain conditions. and dependents are eligible for burial in one of VA's 114 national cemeteries. Burial flags. widower. This includes the next of kin (widow. The VA may also issue a flag for a veteran who is missing in action and is later presumed dead. In such cases. Headstone or grave marker. you may apply at any VA regional office or most post offices. Arlington National Cemetery. f. Burial in a national cemetery. no headstone or gravemarker allowance may be paid for a veteran who died after October 31. Persons entitled to retired pay as a result of 20 years of creditable service with a reserve component are eligible. Arlington. 1990. unmarried adult children also can receive this privilege. a veteran's spouse who did not remarry. oldest child. 2-29 .2403. and have completed the required period of service. b. The following are your specific burial benefits: a. Presidential Memorial Certificates expressing the country's grateful recognition of a veteran's service in the armed forces and bearing the signature of the President are given to the next of kin of deceased eligible veterans or to the next of kin of persons who were members of the military at the time of death. after which it may be given to the next of kin. VA 22211 or call 703 695-3250.

) h. Burial expenses paid by the deceased employer or a state agency will not be reimbursed. or if the veteran died while hospitalized by VA. Eligibility is also established when death occurs in a VA facility or a nursing home with which VA contracted. claims must be filed within 2 years after the permanent burial or cremation. were entitled to receive pension or compensation or would have been entitled to compensation but for receipt of military retirement pay. if the veteran is discharged from active duty because of disability incurred or aggravated in line of duty. (If there are no next of kin. b. c.g. the person who bore the veteran's burial expenses may claim reimbursement from VA. interested friends should apply to a VA regional office to see if a certificate can be arranged. VA also will pay the cost of transporting the remains of a service-disabled veteran to the national cemetery nearest the home of the deceased that has available gravesites. VA will pay a $150-plot allowance under the following circumstances: when a veteran is not buried in a cemetery that is under U.500 if the veteran's death is service-connected. D. if a veteran is buried without charge for the cost of a plot. government jurisdiction. There is no time limit for filing reimbursement claims of service-connected deaths.S. In such cases. VA will pay a burial allowance up to $1. or interment in a state-owned cemetery reserved solely for veteran burials. When would a veteran's spouse be buried in a national cemetery? a.) 2-30 . VA will pay a $300-burial and funeral expense allowance for veterans who.C. d. If the marriage lasted more than 10 years If the spouse did not remarry If this wish was documented in a (deceased) veteran's will If the marriage lasted at least 20 years (Answer: b. Additional costs of transportation of the remains may be reimbursed. Reimbursement of burial expenses. Normally. Notice of a veteran's death. at time of death. The $150-plot allowance may be paid to the state. so the next of kin are spared that chore. but for receipt of military retired pay. In other deaths. if the veteran was in receipt of compensation or pension or would have been in receipt of compensation. notice of a veteran's death is received at one of the VA's regional offices. That facility identifies the next of kin from the veteran's records and requests the Presidential Memorial Certificate from Washington.

") Lesson Summary. financial medical educational burial (Answer: Circle all except "medical. It is always a good idea to know how to calculate your potential retirement pay. RETIREMENT PAY BENEFITS LEARNING OBJECTIVES 1. This lesson contained a lot of legal language explaining some of the current benefits available to families of disabled and deceased veterans. the "high-3" retirement system. to qualify for retirement. you must complete at least 20 years of military service (unless you retire for reasons of disability). There are three general plans now in effect: the "final pay" system. given a retirement scenario. 3. 2501. The discussion covered whether any difference was made by such factors as the disability being a direct result of a service-related injury or not. The terms of your survivors' benefits are subject to change. Identify the number of years of active service required to qualify for retirement pay. Note: Your retirement pay cannot exceed 75 percent of your basic monthly pay. -----------------------------------------------------------------------------------------------------------------Lesson 5. What types of benefits might your spouse find himself or herself entitled to (after checking with the VA office)? Circle them below. Identify which retirement plan would apply. and the "two-tier" system (in addition to disability retirements which can be figured using part of the "two-tier" system). so all "survivors" should know to check with their local VA office to find out exactly what benefits they are entitled to. Calculate the monthly pay using the Retirement Table when given a retirement scenario. and if the veteran had died as a direct result of the injury or not. 2.Suppose you died after leaving the military with a service-connected disability. How many years you need to retire? ___________ 2-31 . General Retirement Information Generally.

two major changes have been made to military retirement pay. Final Pay System (par a... As a result. Before 8 Sep 1980 Between 8 Sep 1980 and 31 July 1986 After August 1986 THEN COMPUTE YOUR RETIREMENT BENEFITS USING THE.) High-3 System (par b. Table 2-10..) 2502.) Two-Tier System (par c.. Table 2-10 shows when to use each retirement system. Determining Retirement Pay Dates IF YOU ENTERED ACTIVE DUTY. 2-32 . Table 2-12 shows how to calculate your retirement pay using the final pay system. over the past few years. Calculate Your Retirement Pay Using the Final Pay System Table 2-11 shows how much of your pay you rate when you retire. However. how you compute your retirement pay now depends on when you entered active military service. it was a simple task for a service member planning a nondisability retirement to determine the amount of retirement pay he or she would receive for his or her active duty military service.(Answer: 20) In previous years.

Calculating Final Pay System STEPS PROCEDURE Multiply your years of service for retired pay by 2.Table 2-11. Example: $2.5 percent. 20 years of service multipled by x. Table 2-14 shows how to calculate your retirement pay using the high-3 system.5 70 72. Table 2-12.5 75 Note: Your retirement pay cannot exceed 75 percent of your base pay.025 (=2.000 your basic pay x .500 (=50%) retirement percent Multiply your basic monthly pay (for the grade in which you retire) by your retirement percent.5 65 67.5 55 57. Final Pay System Retirement Table YEARS OF SERVICE 20 21 22 23 24 25 26 27 28 29 30 PERCENT 50 52.5 60 62.000 your monthly retirement pay Determine your retirement percent Determine your monthly retirement pay 2503. Calculate Your Retirement Pay Using the High-3 System Table 2-13 shows what percentage of your base pay you would receive with the high-3 System.5%) 100 400 result .50=50% $1. 2-33 .

PROCEDURE Multiply the number of years of service by 2. High-3 System Retirement Table YEARS OF SERVICE 20 21 22 23 24 25 26 27 28 29 30 PERCENT 50 52. Multiply your average basic pay for highest 3 years by your retirement percent (2. Example: $1850 year 18 average monthly basic pay $1950 year 19 average monthly basic pay $2200 year 20 average monthly basic pay Compute your average monthly basic pay for these 3 years.5 x 22 years). Example: $2000 x 55% = $1100 your monthly retirement pay 2-34 . Example: $1850 + $1950 + $2200 = $6000 $6000 ÷ 3 = $2000 average basic pay for highest 3 years of service Determine your monthly retirement pay. Calculating Retirement Pay Using the High-3 System STEPS Determine your retirement percent.5 60 62.5 55 57.5 65 67.5 75 Table 2-14.5 70 72.5 percent. Determine your highest 3 years of active duty pay.Table 2-13.

Table 2-16 shows how to calculate your retirement pay using the two-tier system.5 61 64. Table 2-15.5 55 57.5 54 57. Two-Tier Retirement Table Old Retirement (after age 62) YEARS OF SERVICE 20 21 22 23 24 25 26 27 28 29 30 PERCENT 50 52.5 47 50.5 68 71.5 60 62.2504.5 70 72.5 75 New Retirement (before age 62) YEARS OF SERVICE 20 21 22 23 24 25 26 27 28 29 30 PERCENT 40 43.5 65 67. Calculate Your Retirement Pay Using the Two-Tier System Table 2-15 shows what percentage of your base pay you would rate using the two-tier system.5 75 2-35 .

EXAMPLE: You have been working on your personal retirement figures. Your highest 3 years's (36 months) salary Upon reaching age 62. a. TIER #2 Compute the second tier of your retirement (what you will receive after reaching age 62). c. Determine your retirement percent using the "old" retirement percents column of table 2-12 (or multiply your years of service by 2. b. Situation: Suppose you were a 43-year old GySgt with 20 years of active service. Compare your computations with these examples. The "new" retirement percent highest 3 years' (36 months) salary average by for 20 years of service is 40%. Calculating Retirement Pay Using the Two-Tier System TIER #1 Compute the first tier (what you will receive from the time you retire until age 62). 2505. Table 2-17 helps you determine your eligibility. Disability Retirements If you retire because of a disabling injury. c. a. Multiply your average monthly basic pay by the "new" retirement percent. d. Determine your average monthly basic pay for your highest 3 years' (36 months) salary during active duty. 2-36 . you will multiply your averaged $2050. the "old" retirement percent for20 years of service. Round the amount DOWN to the nearest whole dollar. $2050 x 50% = $1025 your monthly pension after reach age 62.5% minus 1% for each year less than 20). $2050 x 40% = $820 your monthly pension for the next 19 years until reaching age 62. Multiply that percent by your highest 3 years' (36 months) salary during active duty.5%). which is 50%. Round the amount DOWN to the nearest whole dollar. you can usually choose to base your retired pay on your disability rating or your length of service. Determine your retirement percent using the "new" retirement percents column of the retirement table shown in the chart (or multiply your years of service by 2.Table 2-16. b.

Two-tier system (Answer: c) Lesson Summary. check with your local VA office to get the most current details affecting you or your family's benefits. Final pay system b.Table 2-17. you are not subject to the 1 percent retirement penalty before age 62. high-3. In this lesson you examined retirement pay systems available to you as a Marine. Multiply your basic pay by your disability rating (with 75 percent of your basic pay as the limit).. Now... As with all the other entitlements and benefits. You plan to retire (at age 40) in June of 2007 (with 20 years of active service).. or two-tier) based on the date you entered active duty. Note: If you are under the two-tier system. 2-37 . Which retirement plan will you rate to calculate your monthly retirement allowance? a. try answering the questions in the study unit exercise and see how much you remember. Your disability Your length of service THEN. Use the formula (final pay. Check your understanding of retirement benefits by answering the following question. Disability Determination IF YOU CHOOSE TO BASE YOUR PAY ON. Suppose you joined the Marine Corps in June 1987 and you are now a Sergeant. High-3 system c.

Column 1 Insurance Terms ___ 1. Amount which will be paid upon death of the insured Periodic payments for insurance paid by the policyholder a. Select the ONE letter that identifies the best description for each term and place it on the blank before the term. Who is eligible? When? Is it a term or whole life policy? ___________________________________________________ ___________________________________________________ 8. Column 2 Definition Written contract or certificate stating the terms of the insurance contract f. and whether it is term or whole life insurance. Premium Beneficiary b. Policy Face amount Cash surrender d. ___ 6.Study Unit 2 Exercise: Complete items 1 through 28 by performing the action required. match the six insurance terms in column 1 with the brief phrase describing each in column 2. ___________________________________________________ ___________________________________________________ 2-38 . ___ 2. ___ 3. Check your responses against those listed at the end of this study unit. Describe the Veterans Group Life Insurance (VGLI). when. ___ 5. Compare it to the SGLI by stating who is eligible. Matching: For items 1 through 6. Describe the Servicemen's Group Life Insurance (SGLI). Person who is to receive the insurance proceeds when the insured dies Policy which has been terminated because premium payments have not been paid Amount available to a policyholder upon voluntary termination of a policy by the policyholder c. 7. ___ 4. Lapsed policy e.

Coverage increases or decreases based on insured's needs Death benefit can vary by going higher than the original amount Provides the same coverage for the entire life span of the insured Builds a cash reserve Pays a lump sum or income to policy holder who lives to a certain age or after a certain amount is paid (or pays beneficiary) a. Variable d. Describe a term life insurance policy. ___ 14.9. Describe a whole life insurance policy. ____ 15. 2-39 . Column 2 Description Policyholder usually pays the same throughout the life of the policy premium f. What are the two special types? ___________________________________________________ ___________________________________________________ 10. ____ 16. Column 1 Insurance Premium ____ 11. Universal life Permanent (cash value) b. Amnity endowment e. ___ 13. ___________________________________________________ ___________________________________________________ Matching. Ordinary (whole life) Adjustable c. Match the type of insurance policy from column 1 on the left to its description in column 2. ____ 12.

Bill? _______________________________________________________ 22. The system that brings together the health care delivery systems and CHAMPUS is ______________________. d. Multiple earnings Wants Tricare Multiple policies Desires Consumer sense b. Bill benefits? _______________________________________________________ 23. Which of the following are the three types of G.17.I. b. 2-40 . Who would enroll your dependents in the FMDP Plan? _______________________________________________________ 21 . Multiple household Needs Tricare Multiple earnings Needs Common sense c. d. a. Which of the following are the three formulas (approaches) to determine insurance needs? a. c. Military/Dependent Health Benefits System Military hospital or health facility within 75 miles Service Health Care Benefits Plan Defense Enrollment Eligibility Reporting System 19.I.I. d. Trade Cooperative training Math assistance Vocational Compensatory training English assistance b. Which agency administers the educational benefits of the G. 18. College Compensatory training School assistance College Cooperative training Tutorial assistance c. The system that serves as the official record of eligibility for individuals receiving uniformed service benefits is ________. benefits? a. 20. What type of discharge qualifies you for all G.

You plan to retire (at age 40) in June of 2007 (with 20 years of active service). how much would your monthly retirement allowance be during the years before you were 62? _______________________________________________________ (Use this space to calculate) 2-41 . Situation: Suppose you joined the Marine Corps in June 1987 and you are now a sergeant. In the situation above. How many years of active service are required to qualify for retirement pay? _______________________________________________________ Items 27 and 28 refer to the situation that follows. Which retirement plan will you rate to calculate your monthly retirement allowance? _______________________________________________________ 28. Read the situation carefully.500. 27. When would a veteran's spouse be entitled to burial in a national cemetery? _______________________________________________________ 26. What are the two types of disability pensions? _______________________________________________________ _______________________________________________________ 25. if your highest average 36-month salary in June 2007 was $2. then answer the items.24 .

Provides protection for only a specific period (number of years) at certain cost. Term insurance on the group plan offered to all active duty service members when they first enlist (and for 120 day s after separation) Term insurance on the group plan offered to newly separated service members. 18. b. f. 20. or throughout your "whole life. The full amount of the policy is only payable if death occurs. It covers the period from 121 days after separation and is renewable every 5 years for the rest of your life. you will cover the concept of "planned" savings and suggest practical ways to implement savings into your financial plans. b. 2105 10. 13. Veterans Group Life Insurance (VGLI). Provides the maximum amount of protection against your death for an indefinite period of time. 15. 3. e. 2106 2106 2106 2106 2106 2106 2108 2202 2205 2206 2-42 . 4. Study Unit 2 Exercise Solutions Reference 1. 2105 11. 12. 19. and retirement systems. 14. 17. 7. 6. 5. a. d. c. d. private life insurance (term and whole life). d. 2104 9. 2. f. e. some VA benefits. b. 16. Tricare Your S-1 or personnel officer 2102 2102 2102 2102 2102 2102 2103 8. a." c. In Study Unit 3.STUDY UNIT 2 SUMMARY In this study unit you read about Servicemen's Group Life Insurance (SGLI).

500 X 40% = $1. Service-connected Nonservice-connected If the spouse did not remarry 20 years "Two-tier" $1. 26. 27. 23. Veterans Administration Honorable b.000 ($2. 25. 24. 28.000 (a month)) 2301 2301 2302 2401 2403 2501 2504 2504 2-43 .Study Unit 2 Exercise Solutions. 22. continued Reference 21.

Identify the key to proper budgeting. 2. Financial planning assistance is available to you if you need it. disability insurance. Identify the two general purposes of saving. Identify the equation for determining financial status or net worth. Budgeting and saving regularly will provide you and your family with financial security. PLANNING YOUR FINANCIAL GOALS LEARNING OBJECTIVES 1. you should allot a portion of your monthly income towards savings. budgeting (including a sound savings program) should be a realistic and reasonable goal. perhaps a benefit of this course will be to show you how to manage your finances so you can implement a savings program in the future. 4. If you feel this is not possible now. Identify the three main activities in financial planning. Whatever your income. and retirement pensions. Nevertheless. Classify expenses as fixed or variable. 3. Identify the two sources available for assistance in financial planning. Identify the basic steps to developing a budget. and some of your government VA benefits including educational funds. Now you're ready to plan for your financial future--commitment to saving. So far you've learned about the papers that identify you financially. your need to plan for a will and insurance. 3-1 . What are your financial goals? How will you achieve them? This lesson introduces a fundamental approach to financial planning--saving. Savings outlays are an expense and reduce your spendable income.STUDY UNIT 3 FINANCIAL PLANNING Introduction. 6. Lesson 1. 5. Making a commitment to saving is not easy. 7. This lesson describes the basic steps to develop a sound financial plan.

Saving has two general purposes: It enables you to achieve your personal financial objectives. (Answer: Liabilities or debts) 3103. determined by the following equation: Assets . Two General Purposes of Saving The principle vehicle that actually takes you to your destination is saving. First. you find out where you are. It provides you and your family with a financial security blanket.3101. Three Main Activities in Financial Planning The three main activities in financial planning are Evaluate your financial status Set financial objectives Plan your budget 3102. Where you are is your current net worth. which is determined by your assets minus your ____________________________________________________. What are the two general purposes for saving? ______________________________________________________________________ ______________________________________________________________________ 3-2 . Evaluate Your Financial Status A financial plan is like a road map. Your savings security blanket can provide for emergencies or in case you become unable to support your family.(minus) liabilities = net worth The best way to get where you want to go is to plan savings and budgeting strategies. answer the following question: To evaluate your financial status. you must calculate your net worth. To review. Then you find the best way to get where you want to go.

What is the next step? .) Having a financial plan is essential.What is the first step toward getting qualified? .Enroll in courses or training. or affording an active retirement. Set Financial Objectives by Working Backwards Personal financial objectives consist of two types: short-term and long-term. what would be your short-term objectives? One way to uncover these short-term objectives is to work backwards. but a commitment to saving is the key to your plan. When your plans look as realistic as you can make them. . Suppose your long-term objective was to buy a house. Your first short-term objective in this case would be to "enroll in courses or training. getting a degree. .Get a steady job with a steady income. . And a key part to successful saving is starting early. paying for college tuition. Your decision to commit will be directly related to the degree of success you will have in reaching your goals and will give you the edge you need to succeed. then commit to them.How would you get that? . Take the time to figure out the details. be prepared to adjust even long-range plans. The earlier you start. establishing a business." You don't have a crystal ball and these are rapidly changing times! So. Long-term objectives are things like buying a home.You would need savings (a healthy bank account). 3104. . what would you need to consider? These become your short-term goals. Thinking backwards in terms of time. and it provides a security blanket in case of emergencies. Short-term objectives are the building blocks used to attain the long-term objective. you will have to extend your timeframe. the bigger the payoff down the road. What is one way to uncover the short-term objectives that lead to the achievement of a long-term objective called? _______________________________________________________________________ 3-3 .How would you get that? . What steps would you take to achieve this goal? That is.Get education/training/certification/skills.(Answer: It enables you to achieve your personal objectives.Get a realistic look at your abilities and background with your career planner. because any time you don't have enough money. .

(Answer: Working backwards) 3105. fixed expenses. After that. Classifications of Expenses Expenses may be classified in one of two ways: a. Fixed expenses are expenses that are the same or almost the same every month (such as rent or mortgage payments. and insurance premiums)." and other unforeseen expenses such as medical emergencies. and variable expenses. variable. 3-4 . Notice the three subheadings: net income. variable) 3106. b. clothing. utilities payments. major home or auto repairs. you will see how to plan a budget step-by-step. miscellaneous unbudgeted "necessities. Your budget helps you set goals for spending (and saving) your money. Plan a Budget A budget is a master plan for sound financial management. automobile expenses (gas and oil). etc. car payments. entertainment. Determine which of the following are fixed or variable expenses: car payment_________ doctor____________ food__________ (Answers: Fixed. Variable expenses are expenses that vary from month-to-month such as food. The sample budget in table 3-1 shows how monthly income is allocated. installment payments on large purchases.

Fixed expenses are expenses that are the same or almost the same every month (such as rent or mortgage payments. miscellaneous unbudgeted "necessities. automobile expenses (gas and oil). Sample Budget RECORD OF EXPENSES FIXED EXPENSES Rent/mortgage 525 Utilities: Gas Electric Water Telephone Auto payment Furniture/appliance Other (identify and list separately) VARIABLE EXPENSES Food 205 Auto expenses 105 Clothing 98 Necessities 100 a. entertainment. etc. (2) (3) 3-5 . Variable expenses are expenses which vary from month-to-month such as buying food. installment payments on large purchases. and insurance premiums).). major home or auto repair. 75 21 49 28 48 30 12 12 43 29 21 37 39 25 16 23 WEEK 1 $ WEEK 2 WEEK 3 WEEK 4 TOTAL FOR MONTH 525 _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ 34 101 18 45 310 38 --- 34 101 18 45 310 38 -- The three basic elements of a budget are (1) Net income is your Marine Corps take-home pay (after taxes) and any other income (from a part-time job. clothing. car payments. utilities payments. earnings of your spouse." and other unforeseen expenses such as medical emergencies. etc.Table 3-1. interest earned from savings accounts.

b. Seven steps to developing a monthly budget (1) Determine your net income. it's the best way to ensure that you save consistently. Total your expenses. Other expenses may be due on a quarterly. or annual basis instead of monthly. Don't attempt to prepare a budget based on anticipated income. and entertainment). Also. Pay your savings program just as you pay your other bills. Remember that some expenses (such as car insurance. it is a written agreement you have made with yourself. Therefore. medical bills. But first. Your budget is a plan to spend. and. or property taxes) may be yearly or semi-yearly expenses rather than monthly expenses and need to be factored in. etc. you may encounter emergency expenses such as home repairs. The phrase "spend on saving" may sound strange. semiannual. after fixed and variable expenses have been subtracted. List your variable expenses (such as food. Write down what you spend or plan to spend on each fixed and variable expense. and insurance premiums). clothing. but that is exactly how you should approach saving--as an expense. Subtract total expenses from your net income (take-home pay). how do you draw it up? c. the key to proper budgeting is to keep complete and accurate records that take all known and foreseeable expenses into consideration. gas. emergency leave. (2) (3) (4) (5) (6) (7) Part of planning your budget is to get realistic figures for your budget. You should give further consideration to fixed and variable expenses. automobile repairs. The remainder of your net income. If the remainder for investing in savings is too low. 3-6 . Add up your variable and fixed expenses for that month.Use only your net income to prepare your budget because it is the amount you actually have available. You can do this by keeping an accurate record of your income and expenses for at least three consecutive months. car payments. Determine the amount you can spend on saving. Remember to use your take-home pay and any other income to calculate your net income. List your fixed expenses (such as rent. it is a master plan for sound financial management. Use only income you are sure of. if properly prepared. since those recorded for a two-month period probably do not represent all your expenses. When you draw it up. look for ways to reduce your expenses. can be put towards savings. Use records from previous monthly expenses to help you determine fixed and variable expenses.

After computing, recording, and verifying your figures, you can now analyze your financial situation. Are you spending too much money on clothing or entertainment? Are your automobile expenses higher than you planned? Table 3-2 shows average expenditures for one person. It should help you see where you might be overspending, and where you can cut back to add to your savings. Table 3-2. Typical Expenditures
Expenditure Clothing Food Housing Medical Savings/Investments Transportation Other Percentage of Income 5% 15% 30% 5% 5% to 10% 15% to 20% 15%

Since you can easily see where you have overspent or overbudgeted, it will now be obvious to you which areas within your budget require adjustment or remedial action. On the other hand, if you are within your budget and have income in excess of your expenses, it would be wise to increase the amount of your income allotted to "savings" (assuming that the additional income can be applied toward savings on a regular basis). Otherwise, the additional income should be deposited to savings as it occurs. The temptation to spend the extra money as a "reward" for staying in your budget will be great, but must be avoided! Because of the rapid changes in today's economy, your budget must be reviewed and updated frequently, possibly every three months, to be accurate, realistic, and effective. Your budget is of no value unless you "live" within it! What is the key to proper budgeting? ______________________________________________________________________

(Answer: To keep complete and accurate records)


3107. Develop Your Budget Do you remember the seven steps to developing a budget? If not, turn back to paragraph 3106. Use them to complete the following worksheet, then update your budget a minimum of every quarter (every 3 months). Table 3-3. Budget Worksheet Type of Expense FIXED Rent/mortgage Utilities Gas Electric Water Telephone Other (Identify) Auto Payment Furniture/appliance Insurance Premium Other (Identify and list separately) VARIABLE: Food Auto Expenses Clothing Necessities (laundry, barber, cosmetics, etc.) Entertainment Savings Other (Identify and list separately) Total Expenses _____________ _____________ _____________ _____________ _____________ _____________ _____________ _____________ _____________ _____________ _____________ _____________ _____________ _____________ _____________ _____________ _____________ _____________ _____________ Amount You Spend

3108. Assistance Available in Budget Planning You have at least two sources of help in your financial planning. They include the following: Marine Corps Family Services Center The Navy-Marine Corps Relief Society


a. The Marine Corps Family Services Center has a lot of excellent literature available. It frequently offers classes and offers individual counseling at some locations. Check with your center for further information. b. The Navy-Marine Corps Relief Society is a private, non-profit emergency relief organization. Its purpose is to provide temporary assistance to Marines and sailors, active duty and retired, and their family members or survivors in need. The society can guide you concerning whom to see, where to go, and what to do about your particular problem. Lesson Summary. This lesson pointed out the two general purposes of saving which are basic to your financial planning, and the key to proper budgeting. The next lesson will teach you how to choose a financial institution and savings program. -----------------------------------------------------------------------------------------------------------------Lesson 2. CHOOSING A FINANCIAL INSTITUTION AND TYPE OF SAVINGS PROGRAM

Introduction. How financially informed are you? Do you think CD stands for compact disc? Do you know how to select the financial institution and savings plan that's right for you; one that will enable you to achieve your long-term financial objectives? This lesson helps you select a financial institution that fits your financial plan and introduces some of the basic types of savings programs these institutions offer. Choosing a savings plan starts with researching financial institutions and the various savings programs they offer. Selecting the right financial institution can help you meet your current financial needs, and choosing the right savings program is the best way to insure your financial future. To make this important choice, you need to learn about the following three topics: Financial terminology Financial institutions Savings programs


A dividend is a payment in cash or stock to the owners (stockholders) from the earnings or capital of the company invested in. CDs. Identify the minimum age at which an individual can normally withdraw funds from an Individual Retirement Account (IRA). Identify the block numbers on an LES that indicate the amount deposited to your account under direct deposit. etc. Match twelve important financial terms with their definitions. Identify three types of electronic deposit systems. The three terms below pertain to interest. 4. For example. Identify five specific types of savings plans.) means the date when full earned payment is due you. your share of the profit (depending on how much stock you own) is paid to you as a dividend. Identify three factors in choosing a financial institution. (1) Maturity as it applies to investments (such as treasury notes. the investor. Compound interest is interest earned over a period of time and is periodically added to and becomes part of the principal. 5. (2) 3-10 . 3. 3201. 5 percent interest on a $10. Financial Terms a. Identify four basic types of financial institutions. 6. you make more money on your investment since your interest is added to your initial investment (the principal) and it. With compound interest. The three terms below pertain to investments. usually expressed as a percent of the principal amount. (1) Simple interest is an amount of money paid for the use of money. earns interest. too. 7.000 principal is $500. (2) (3) b. Simple interest is a straight percentage. If you own stock in a company that makes a profit. Accrued interest is interest which has accumulated but has not been paid to the lender. 2.LEARNING OBJECTIVES 1. savings bonds.

(Answer: Compound interest) 3202. Collateral is property or evidence of property that is given to a creditor to guarantee or provide security for the payment of a loan or debt. then you are solvent. The yield is your return on your investment. If your assets are greater than your liabilities. To file for bankruptcy. (2) (3) Interest earned over a period of time and added to the principal is called _______________. If you default on a loan (do not pay it back according to the agreement). (2) (3) d. If you are forced into bankruptcy. A $1.(3) Yield. Bankruptcy is the condition of a debtor who has been adjudged insolvent by a court of competent jurisdiction. giving the net worth as of a certain date. as used in the financial market. Solvency is the condition that exists when a person's (or company's) total assets are more than total liabilities. A lien is a claim on property usually made to secure payment of a debt or fulfillment of some form of contract obligation. (1) Balance sheets are lists of a person's (or company's) assets. (1) An asset is something of value that is owned. c. The three terms below pertain to financial standing (managing debts). meaning you do not have enough assets to pay your liabilities. The three terms below pertain to property and loans. you file a court petition saying you are insolvent. You may have to put up one or more of your assets as collateral for a loan. the courts decide how you will repay your debts. Four Basic Types of Financial Institutions The four basic types of financial institutions are Commercial banks Savings banks Savings and loan associations (S&Ls) Credit unions 3-11 .000 bond that pays $100 interest has a yield of 10 percent. minus the liabilities. is the annual net return on an investment expressed as a percent. the lender can seize and sell your collateral.

Have lower lending rates and fees because they are not-for-profit. or credit union. Which type of institution would you choose? ______________________________________________________________________ Suppose you wanted to join a financial institution that offered a somewhat higher rate of interest and maybe offered dividends. their charters prevent them from doing business with the general public. interest rates. Most bank failures have occurred among S&Ls. checking. Offer low-cost savings and checking services. and Offer lower interest rates and checking services and generally guarantee their many fees. Savings and Loan Credit Unions Please read each of the following situations and choose the most appropriate type of financial institution--commercial bank. of year-end dividends paid out on interest earned. and saving services. Have limited services and a They offer savings services with the possibility limited number of locations. Have few branches and can be high risk. You must be a member of a credit union. Earnings are paid out to members as year-end dividends.Table 3-4 lists each of these institutions and their advantages and disadvantages. Which type would you choose? ______________________________________________________________________ Suppose you wanted to buy shares in a financial institution that didn't offer its services to the general public and charged a generally lower rate of interest for borrowing. saving. Suppose you wanted your personal finances handled by an institution that offered lending. Advantages and Disadvantages of Financial Institutions Financial Institution Commercial Banks Savings Banks Advantages Disadvantages Offer the broadest range of lending. and savings bank) 3-12 . S&L association. savings bank. You should consider these advantages and disadvantages when you choose where you want to place your savings. often with good rates. May have lower fees and more personal service. Have few branches. Which type would you join? ______________________________________________________________________ (Answers: Commercial bank. Table 3-4. credit union.

a. Check with your financial institution to see what insurance coverage it provides. don't consider opening an uninsured account unless you are willing to gamble! c. Make sure it meets your personal needs as well. b. There are three main factors to consider when choosing a financial institution for your savings: insurance. Terms and conditions. You may want a better rate of interest than at a commercial bank and are interested in an institution that offers dividends. You may also want the convenience of many branches and ATMs (automated teller machines). checking. It is important that you choose a type of financial institution for savings that has insurance to protect your investment if it fails. Pick an insured financial institution with great service.3203. Customer service is the financial institution's way of providing you with personal service. Three Factors to Consider When Choosing a Financial Institution You may want your personal finances handled by an institution that offers lending. While most institutions offer insurance protection for their accounts. The terms and conditions that financial institutions impose and/or offer customers are varied and change constantly. and high interest rates. and saving services. loan fees. Insurance. Choose a financial institution that has terms and conditions that support your financial plan. Such insurance is usually provided by one of the following agencies: FDIC Federal Depositors Insurance Corporation SCUSIC . some state-chartered financial institutions are not required to carry such insurance. Financial organizations must pay a premium for insurance protection for their depositors. terms and conditions. are canceled checks returned with the monthly statements? Can you arrange for automatic deposit of your paycheck? How about immediate credit on deposits? How about a loan or line of credit? What are the fees for these services? Sometimes you have to compare differences in rates. You want a place to put your savings. However. and customer service.State Credit Union Share Insurance Corporation Note: Most insurance coverage protects only deposits. Customer service. A financial organization that does not carry insurance will often pay a higher interest rate on savings accounts. savers have no protection from losing part or all of the money in their accounts if the financial organization defaults. and accessibility very carefully. at such an institution. remember. low costs. For instance. good terms. But. Do they have many locations and automated teller machines (ATMs)? Are the hours of operation convenient? Can you bank from home or by phone? 3-13 .

you may not or traditional available account Disadvantage: Lower interest rates earn as much interest as with other types of savings programs. Offer the same advantages as treasury bonds. Treasury Bonds Treasury Notes Individual Retirement Accounts (IRAs) 3-14 . They earn a high rate of fixed interest (the interest rates remain the same). However. usually at least 5 years. you pay a 10 percent penalty plus taxes owed (unless you are permanently disabled). Advantage: Safe investment and high fixed rate of interest Disadvantage: Requires a minimum investment and funds are tied up for a specified term. It may help you make your decision. and you pay financial penalties for early withdrawal. Advantage: Same as treasury bonds. when your income and therefore the tax you'll pay on it is lower. As with bonds. Safest program since the government backs your investment. until the bond is mature. Table 3-5.Three factors you should consider when choosing a financial institution for your savings are insurance. and ________________________________________. Offer good interest rates and earnings are not taxed until you begin making withdrawals at retirement. if you withdraw funds before age 59½. can be bought directly from a Federal Reserve or from brokers Disadvantage: You must wait until the bond matures (1-7 years) or interest is lost. terms and conditions. such as 6 months or a year. and interest earned on savings accounts is fully taxable. But. Advantage: Earn a high rate of tax-deferred interest Disadvantage: Penalty for withdrawal before age 59 ½ Earns a higher rate of interest than most savings accounts. Savings Plans Table 3-5 provides a comparison of the five major types of savings plans. a minimum investment is usually required and your funds are tied up for a specified term. Certificate of Deposit (CD) Advantage: Earns higher interest rate than most savings accounts Disadvantage: You must keep funds in a CD for a specified time and penalized for early withdrawal. you must wait until the note matures (usually 1-7 years) or you lose the interest. but they can be bought directly from a Federal Reserve Bank or from brokers. However. (Answer: Customer service) 3204. Five Types of Savings Plans Type Advantages/Disadvantages Description Funds are immediately available for withdrawal Basic savings Advantage: Funds immediately or transfer to checking. but you must keep your funds in a CD for a specified term.

Savings Bonds by means of a "B" (bond) allotment deduction from their paycheck. c. A good way to put money into a savings account is through an electronic deposit system. You want to earn the most interest with the least risk. There are many amounts and types of savings bond deduction plans. Which savings plan makes the most sense for you? a. Treasury's name for an electronic funds transfer system that transfers your salary directly to your checking and/or savings accounts. you have $500 left over for savings. Treasury bond (Answer: b) What is the normal age required to withdraw funds from an IRA account without penalty? _____________________________________________________________________ (Answer: 59½ years) 3205. This amount is automatically deposited to your savings account at the end of the month. "S" (savings) allotment. 3-15 . Setting Up Your Savings Account for Electronic Deposit In addition to other savings programs. You can set up your electronic savings deposit in three ways: through "S" (savings). Many Marines purchase U. "B" (bond) allotment." a. and you are confident you will not need the money for at least 2 years. Basic savings b. CD c. b. IRA d. you should have a basic savings account so that you can earn some interest on your money and have the money available immediately if you need it. or "direct deposit.After figuring your expenses.S. A set amount of money is withheld from your paycheck at the mid-month and the beginning-of-the-month paydays. Direct deposit. "B" (bond) allotment. The direct deposit system is fast and reliable because it uses the Federal Reserve Distribution System.S. Direct deposit is the U. This system allows the bank to automatically withhold a specified savings allotment from your paycheck and deposits it into your savings account. Obtain information about them at your administrative or disbursing office or from your savings bond representative.

The three types of electronic deposit systems are "S" (savings) allotment. Lesson 3 will teach you how to select a checking account plan and how to maintain your checking account. how to choose the type of institution for your savings needs. and _____. LES Block Numbers Indicating Your Direct Deposit Amount Check blocks 29 and 30 of your LES to be sure the amount you wish is being taken out of your paycheck. Direct deposit d. and how to select the type of savings program that will meet the financial goals you identified in lesson 1. BLOCK 29 Amount of your pay for the 1st of the month BLOCK 30 Amount of your pay for the 15th of the month If the actual amount of your pay varies $5 more or less from the amount in block 30. Split allotment b. a. This will inform you of the deposit date and the amount that will be deposited in your account. you will receive an "advice-of-deposit" notification. Remember to check out the institution of your choice carefully and get the scoop on terms and security of funds before depositing or investing a cent. Tax deferral (Answer: c. Income distribution c. how to set up your savings account electronically. In this lesson you learned some basic financial terminology. 3-16 . "B" (bond) aloment.) 3206. Which blocks of your LES do you check to see what part of your salary was deposited after deductions? ______________________________________________________ (Answer: 29 and 30) Lesson Summary.

Identify correctly written deposit slips. 5. Why Have a Checking Account? The most important reason to have a checking account is for safety. and certainly the most used. and (most important) balancing your checkbook. Identify the most important reason for having a checking account. Accuracy . writing checks. payment by checks has largely replaced payment by cash. item in an individual's financial arsenal. 6. Identify the four types of check endorsements. This lesson gives an overview of the three types of checking accounts and the three ways they may be set up. 3-17 . Identify the most important thing to remember about managing your checking account. 7. preparing deposit slips. 8. You do not have to personally pay bills.Lesson 3. Using checks helps you keep within your budget since you record your expenses.Canceled checks are proof of payment. 10. 9. 2. Identify the reason to keep deposit receipts. but. it is simply unwise to leave or carry large amounts of cash around! Also. Identify the steps to balancing your checking account. 3. The checking account is perhaps the most useful. 4. Payments can be made anytime. Identify correctly written check registers. for many reasons. in this day and age. it is highly impractical not to have a checking account. Here are some other reasons to have a checking account: Convenience . Identify the three types of checking accounts. Once upon a time cash was the common method of payment.Checks save time. Identify three ways checking accounts may be set up. 3301. LEARNING OBJECTIVES 1. Identify correctly written checks. But few people keep their checkbooks in good working order. SELECTING AND MAINTAINING YOUR CHECKING ACCOUNT Introduction.

Establish credit .) Managing your checking account can be divided into three topics. Opening or setting up a checking account Writing and recording checks Balancing your account 3-18 . Most adults have a checking account. but few maintain their account properly. open a charge account. Proper maintenance of your checking account enables you to Avoid unnecessary fees and penalties Track your spending habits Stick to your budget and savings plan Get the most mileage out of your money What is the most important reason to use checks? ______________________________ (Answer: It is unwise to carry large amounts of cash around. etc.A checking account is a good reference when you apply for a loan.

the consumer. Checking accounts can be set up to allow certain credit cards to provide an emergency advance of funds to prevent an overdrawn checking account. Two types of special checking account services offered by some financial institutions are Bill paying account. gasoline. Table 3-6.3302. Funds are deposited in your account and the depositor requests the payment of specific amounts for various purposes. This overdraft protection coverage has various names and different methods are used to apply for it Make sure you understand the repayment procedures and the type of interest rate charged if you choose this type of account. banks offer many special services so be smart! Shop around before deciding where to put your hard-earned money. etc. 3-19 . Types of Checking Account Services Banking has become a competitive industry which means you. Credit cards to back up checking. benefit. Three of them are described in table 3-6. Types of Checking Accounts Banks offer a variety of types of checking accounts. You can pay bills for fixed expenses (such as utilities. Today. and other credit card purchases.) by telephone using special codes and numbers. Types of Checking Accounts Type Regular Features No minimum balance necessary No interest paid on balance Usually a charge for check writing Monthly maintenance charge likely Minimum balance usually necessary Bank pays interest on balance Possible charge per check and monthly maintenance charge if balance falls below minimum Bank pays higher interest rate on balance Large minimum balance necessary No charge for check writing Possibly no monthly maintenance charge NOW (Negotiable Order of Withdrawal) account Super NOW Account 3303. This permits you to earn interest on all of your funds except the portion that you request to be used for payment of specific bills.

3-20 . Sign (or endorse) this card exactly as you would sign the checks in your checking account. Figure 3-1 shows a sample signature card. One or more people are authorized to write checks for a company or organization. Setting Up a Checking Account There are three ways you can set up a checking account.3304. Many married couples use joint accounts. Fig. (Answer: Joint account) When you first establish your checking account. Accounts are set up according to who can write checks against them. If you are single. Two or more people are authorized to use the account. Signature card for joint account. If a checking account has two signature cards (meaning two people are authorized to use the account). the account is termed a ______. Only one person is authorized to use the account. you will have to fill out a signature card. you would probably have this type of account. Business accounts. Joint accounts. 3-1. Individual accounts. The signature card records your check-signing signature.

3305. How to Write and Record Checks Once you have opened your checking account, you must learn the correct procedures for writing and recording your checks. In short, you must know how to prepare three items: the check, the check register, and the deposit slip. a. The check. A check is a written order instructing the bank to pay money from your account to a payer. Figure 3-2 shows an example of a correctly written check.

Fig 3-2. Sample check. The circled numbers in figure 3-2 identify where to enter information. Follow them with their steps in table 3-7 to complete the check writing process.


Table 3-7. How to Write a Check Step 1 2 Explanation Check number. The assigned sequential number of the check used in record keeping. Most checks have pre-printed check numbers. Date: Write today's date. Do not postdate checks. Postdating a check (writing a future date on the check) is a dangerous and illegal practice. Besides, the check may still be paid before the date, since bank scanners cannot read the hand-written date. Pay to the order of: Write the name of the person or business to whom you are writing the check. Amount in numbers: Write in numbers the amount to be paid. Amount written out: Write in words the amount to be paid. Any amount under one dollar is written as a fraction. To prevent anyone from altering your checks, extend a line all the way to the word DOLLARS. Memo: Write the purpose for the payment here. This will help your record keeping. Signature: Sign the check EXACTLY as you did on the signature card when you opened the account. Signing the check makes it negotiable or payable.

3 4 5

6 7

Important things to remember about writing checks: Always use ink to prevent anyone from attempting to alter it. Initial all changes. If you make an error, cross out the error, put in the correct information, and then initial the change. Void and rewrite the check if required. Keep track of voided checks. If you do void a check, file it with the canceled checks you receive with your bank statement, or tear it up and throw it away. Be sure to record it in your check register. When you want cash from your checking account, don't make a check out to "cash." Instead, make the check out to yourself. In that way, if you lose the check, no one else can cash it. b. Check register. When you write a check, use an ATM card to withdraw money from checking, or use a debit card to withdraw money or make a purchase, you must record the transactions in your check register. In the register you also record the date, amount of each deposit, and balance after you make each "deposit" (amount of cash and/or checks put into your account). Check registers have one of two types of entries. The double line entry is shown in figure 3-3 and the single line entry is shown in figure 3-4. The double line entry provides separate space to compute your addition or subtraction, whereas the single line entry expects you to compute in your head or on other paper. 3-22

As an example for both types of entries, let's assume that on 20 June you wrote a check to your doctor in the amount of $95 for your annual physical, and the following day you deposited $200 to your checking account. The circled numbers in figure 3-3 show where you would put the information in a double line entry.

Fig 3-3. Sample check register (double line entry). Notice that in the double line entry (figure 3-3), you wrote the amount of the transaction (check or deposit) on the first line in the balance column and you wrote the new balance on the second line. Looking at the circled numbers representing the same information in the single line entry (figure 3-4), notice how you would record the same transaction to the left of the balance column and the new balance on the same line to the right.


Balance: Compute your checking account balance by subtracting the amount of the payment/debit or by adding the amount of the deposit/credit. The circled numbers in figures 3-3 and 3-4 identify where to enter information. Sample check register (single line entry). Follow them with their steps in table 3-8 to complete the check register. If your register has two spaces (as many do). ATM fee). Explaination of Check Register Entries Number 1 Explanation Number or transaction code: Record the number of the check here. write the purpose of the check underneath the payee. 3-24 . 2 3 and 4 Transaction description: Write the name of the payee (the person or business to whom you are writing the check) here. This will help you keep track of checks and help you balance your account when the bank sends your statement. 5 and 6 Payment/debit: Write the amount of the payment or withdrawal to be subtracted from your account.Fig 3-4. Some registers also provide space to record any fees (check writing or cashing fee.) 7 8 Deposit/Credit: Write the amount to be deposited to your account here. Date: Write the date of the check. Table 3-8. The purpose information would likely duplicate what you wrote in the MEMO line of the check. (Notice the dollars column is separate from the cents column.

In addition to blank checks and a check register. Fig 3-5. Deposit slip. It can serve as proof that you actually made the deposit in case the deposit doesn't appear on your bank statement. your checkbook contains deposit slips printed with your name and account number. See figure 3-5 for a completed deposit slip and table 3-9 for its explanation. 3-25 . The circled numbers in figure 3-5 identify where to enter information. Deposit slips are used to itemize any cash and checks that you put into your account. Completed deposit slip with cash being received. When you make a deposit. you must transfer the information directly to the check you are writing. This will ensure that you write the check exactly as the transaction appears in your register.Now that you've completed the check register. c. Follow them with their steps in table 3-9 to complete the deposit slip. make sure you retain the deposit receipt.

Signature: Sign here if you plan to get some cash back from your deposit instead of depositing the full amount. To endorse a check.Table 3-9. d. Otherwise. There are four types of endorsements: A blank endorsement (which is your signature alone) should not be made on a check until you are at the bank and ready to cash or deposit the check. Net deposit: Write the amount that is left after subtracting the cash you want back from the total amount of your deposit. Why should you keep your deposit receipt after making a deposit into your bank account? a. Less cash received: Write the amount of cash (if any) you want back. c. b. Total: Total the amount of currency. FDIC regulations require it To use when preparing federal income taxes To prove that the deposit was made To submit all deposit receipts to your bank at year's end (Answer: c) Complete and maintain all documents associated with checking accounts very carefully. Currency and coin: Write the amount of any currency (cash) or coins you are depositing. Failure to do so or doing so carelessly could result in an overdrawn account or make it very difficult to trace a check you have written! 3306. anyone can cash it! 3-26 . Completing the Deposit Slip Number 1 2 3 4 5 6 7 Explanation Date: Write the date of the deposit here. sign your name on the back exactly as it appears on the front of the check. coins. Check Endorsements If you make your deposit using a check. enter a dash. and checks you are depositing. if you misplace the check and if it has a bank endorsement. If you want no cash back and want to deposit the full amount. This is the amount you will record in the Deposit/Credit box of your check register. Checks: List each check separately and identify it by its source. you must endorse the check before the bank will accept it. Your endorsement must appear within the top inch-and-a-half of the left end of the check.

if for some reason your name is misspelled on the check.) 3-27 . make a restrictive endorsement. Fig 3-6. Look at the comparison of these four types in figure 3-6. The restrictive endorsement contains the words "FOR DEPOSIT ONLY" with your signature below. A check endorsed in this way cannot be used for any purpose other than to deposit to a specified account. you must first sign your name exactly as it appears on the face of the check (misspelled). Four types of endorsements. This type is a special endorsement.To avoid the possible misuse of your check. If this is impossible or impractical. attempt to have the check reissued to you. If you wish to transfer a check payable to you to another person or account. and then sign your name correctly below it. the proper endorsement would be the words "PAY TO THE ORDER OF (NAME OF THE SECOND PARTY)" with your signature below. If you were given a check on which your name was misspelled (and you were not able to have the check reissued) how could you cash it? _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ (Answer: First sign your name exactly as it appears on the face of the check and then sign it correctly below it. Finally.

using ATMs. Since you should balance your checkbook monthly. check register. All of these forms are described in the following pages. The financial institution will provide periodic "statements" (usually monthly) which list all transactions affecting your funds during that time. make sure you have your checking account at a bank that sends monthly statements. all deposits made. Bank statement. etc. and reconciliation form. including your beginning and ending balances. canceled checks and deposit slips. You can also keep track of any fees you are paying for writing checks. These paid ("canceled") checks and your deposit slips are often included with the checking account statement when it is sent to you. How to Balance Your Checking Account Balancing your account helps you manage your cash flow. and guard against over-drawing your account. 3-28 . control spending.3307. all checks written which the financial institution has paid. These are the documents you need to balance your checking account: bank statement. and any service charges deducted from your account. See the sample statement in figure 3-7 on the next page.

Having outstanding checks (those not yet canceled) can throw off your records.Fig 3-7. Bank statement. Also compare your canceled checks with your check register to detect any recording errors. Check register. Compare your bank statement with your check register to make sure the checks you wrote were cashed by the recipients. 3-29 . Check to see if the balance you have in your check register matches the balance on the bank statement (at the time the statement was sent out).

3-30 . Reconciliation form. fees. Compare the result to the check register. Subtract withdrawals. Table 3-10 shows the steps to balance your checking account: Table 3-10. Make corrections to your register as necessary. One is usually printed on the reverse side of your monthly bank statement. The canceled checks and your deposit slips are often not included with your checking account statement when it is sent to you.Canceled checks and deposit slips. Take the closing balance number from the bank statement. Canceled checks are checks that have been paid. Steps in Balancing a Checking Account Step 1 2 3 4 5 Action Compare each transaction on your bank statement with your check register. Reconciliation form. Fig 3-8. If there is a mistake on your bank statement. you should use a reconciliation form like the one in figure 3-8 to "reconcile" (balance) your checking account. Add deposits made since the bank closing date. or checks written since the closing date.

these checks create an air of mistrust in the civilian community towards all Marines and thereby jeopardize check cashing privileges for other Marines and their dependents.3308. The check will be marked "NSF" for "not sufficient funds. 3-31 . Why is accuracy in all checking account documents so important? ______________________________________________________________________ (Answer: To prevent you from writing a bad check.) Lesson Summary. In this lesson. Writing a check on a closed account or writing a check when there are insufficient funds in your account to cover such a check are serious criminal offenses under both military and civilian law. In addition to the personal financial problems resulting from dishonored checks. Writing a bad check on base can lead to non-judicial punishment (NJP) and revocation of base check-writing privileges." with a typical charge of $25 or more. you learned how to select a checking account plan and how to set up and maintain the checking account. Maintain Your Checking Account The last and most important information you need to know about a checking account is that you must never write a check in excess of the amount of funds in your checking account! If you write a check on your account and do not have the money to cover it. And many will not allow you to ever write a check there again! Both the Marine Corps Manual and the Legal Administration Manual states that Marines are expected to pay their just financial obligations in a proper and timely manner." and is said to be a "bad check" or to "bounce. the bank will return the check to the payee unpaid." Most financial organizations assess a service charge for processing a "bad check.

_____________________________________________________ 4._____________________________________________________ b.liabilities. State the two general purposes of saving. insurance. net worth = liabilities . 5. a. Check your responses against those listed at the end of this study unit. Your two sources for assistance in budget planning are _______________ and ________________________. c. 3. 1. c. b. long-term objectives b. short-term objectives 2. Automobile payment. setting financial objectives. net worth = liabilities + assets. One method of setting financial objectives is to work ____________. and utilities are all examples of _____ expenses. net worth = assets . d. fixed b. 3-32 . and planning your _____________. a. The three main activities in financial planning are evaluating your financial status. budget savings The equation for determining financial status or net worth is a. State the key to proper budgeting.Study Unit 3 Exercise: Complete items 1 through 32 by performing the action required. rent. variable 6. _______________________________________________________ 7. a.assets.

_____________________________________________________ 13. match the term in column 1 to its definition in column 2. List three types of electronic deposit systems. ___ 10. a. List three factors to consider when choosing a financial institution._____________________________________________________ b._____________________________________________________ c. b. basic or traditional accounts. d. treasury notes and _______________________. a. List four basic types of financial institutions._____________________________________________________ b.Matching: For items 8-11. a. 3-33 . Yield Solvency Collateral a. Accrued interest 9._____________________________________________________ c._____________________________________________________ 14. 16. The five types of savings programs are IRAs._____________________________________________________ d._____________________________________________________ b. treasury bonds. 11._____________________________________________________ 15._____________________________________________________ c. Column 1 Term ___ more ___ ___ 8. c. Column 2 Definition The condition when the assets weigh than the liabilites What has accumulated but not paid What you put up as security for a loan Annual net return on an investment (percent) 12. The minimum age you can normally withdraw frunds from an IRA is ______.

17._________________________________________________ b. State the LES block numbers which indicate the amount deposited to your account under direct deposit. ________________________ What is the most important reason for having a checking account? ________________________________________________ 18. What are the three types of checking accounts banks offer? a. 24. Why would you not make out a check to "cash?" ______________________________________________________ 23. The place you record the checks you have written is called the ______________. a.____________________________________________________ 20. List two types of special checking account services offered by some banks.____________________________________________________ b._________________________________________________ 22._________________________________________________ c.._______________________________________________________ 21.____________________________________________________ c._______________________________________________________ b. Why should you keep your deposit receipts for your checking account? _________________________________________________________ 3-34 . 19. What are the three ways you can set up your checking account? a.

Correctly complete the deposit slip below to show these deposits.Directions: Use the sample DEPOSIT SLIP. Enter the two deposits made (in item 25) on the register below. 25. Suppose on 30 January 1993 you receive your Marine Corps paycheck for $350 and also receive a $10 check from Aunt Sally as a birthday gift. and REGISTER provided below to complete items 25 through 27. 3-35 . 26. CHECK.

on the next day (31 January 1993) you purchase groceries at Bestway Foods with a check (#101) for $53. Having made these deposits.27. Please fill out the sample check below for this amount and also enter this check into the register in item 26. 3-36 .18.

3-37 . Restrictive b. ___ 31. Column 2 Sample ___ 29. Misspelled d. ___ 30. match each type of check endorsement in column 1 with the letter of the appropriate sample in column 2.Matching: For items 28 through 31. Column 1 Type of Endorsement ___ 28. Place answers in the spaces provided. Blank a. Special c.

Savings and loan associations d. 3. Once you choose an account. In the next and final study unit. to keep complete and accurate records a. you will learn financial aspects of making major purchases like motor vehicles and homes. Enable you to achieve your personal objectives Provide you and your family with a financial security blanket backwards a. 10. 13. Insurance b. 8. 2. c. First. if the financial institution you choose is not INSURED. 14. 7. 11. 3101 3102 3103 4. 9. Study Unit 3 Exercise Solutions Reference 1. Savings banks c. The Navy-Marine Corps Relief Society b. Marine Corps Family Services Center b. State the most important thing to remember about a checking account. d. b. take some time to visit and talk to various financial institutions about what they can do for you and your money. there are alot of factors (other than income) that enter into a personal savings plan. c. Find out about the financial institution before you deposit your money! As you learned in this study unit.32. 6. a. a. a. ensure that you understand what it means and can mean (its terms and conditions). ________________________________________________________ STUDY UNIT 3 SUMMARY As you can see. 5. there are always several account plans from which you may choose the one best for your needs. remember you are taking a big risk. Terms and conditions c. Credit unions a. Commercial banks b. Then. 12. Finally. you must have a goal to maximize your chances for success. c. 15. Customer service Certificate of deposit (CDs) 59 1/2 3104 3105 3106 3108 3201 3201 3201 3201 3202 3203 3204 3204 3-38 .

Direct deposit Blocks 29. Savings allotments ("S") b. continued Reference 16. 18. 23. 19. 3206 3301 3302 20. Credit card a. 21. Super NOW a. a. 24. 3305 3305 3305 3305 3-39 .Study Unit 3 Exercise Solution. Individual c. no one else can cash it. 3303 3304 22. Check register Receipt will serve as proof that you made the deposit 3205 17. Bill paying and b. Bond allotments ("B") c. 25. Regular b. Business If you lose it. NOW (Negotiated Order of Withdrawal) c. Joint b. 30 It is unwise to carry large amounts of cash a.

3305 28. d. 30. Never write a bad check 3306 3306 3306 3306 3308 3-40 . c. 3305 27. b. a.Study Unit 3 Exercise Solutions. 32. continued Reference 26. 31. 29.

Credit means "buy now. Our national and global economies are very dependent upon the availability of credit to consumers. or other items. 2. It will list and describe basic costs of credit and of buying a car or a house. pay later. Lesson 1. Identify two disadvantages of using credit. Now that you have a good idea of where you are financially now. 4-1 .STUDY UNIT 4 FINANCING MAJOR PURCHASES Introduction. you can decide where you want to be in the future and make your plans more specific. Identify credit terminology. Plan how to get from here to there. Identify six guidelines for using credit. houses. EXAMINING CREDIT LEARNING OBJECTIVES 1. Any type of planning has these three phases: . automobiles. Determine where you are. . Identify three undesirable clauses that should be avoided when making a loan agreement. Borrowing with credit is so popular in today's society that many of us could not imagine a world without credit--a world in which we would have to wait until we had saved the cash for such things as going to school or buying furniture. Uses range from "credit-card shopping" to arranging "loans" from financial institutions for very expensive items. but pay for them over time. you must have a thorough understanding of credit because that's how you will probably pay for your biggest investments. 4. You will learn where to go to borrow money and how to use credit wisely. This study unit helps you practically plan for the types of hurdles that lay ahead. Decide where you want to be." Credit permits you to purchase goods or services as you need them. Identify six suggested precautions to safeguard your credit cards. 5. 3. 6. Identify general advantages and disadvantages to apply for a loan from three types of financial institutions. Even if your main objective is not buying a car or a house.

The amount of credit you can obtain depends on your net worth. This is the original loan amount. you have the option of paying the balance in full each month or making a minimum payment. usually monthly payments.000. Interest. become familiar with the fundamental terms of credit. use the APR. the seller owns the goods until all payments are made. All creditors may submit bill-paying information to a credit agency. MasterCard. doctor bills. Your credit line depends on your net worth. This is a line of credit that may be used over and over again. your income. your income. 4-2 . or most department store charge accounts. Installment credit allows a buyer to pay for a purchased item in regular installments. The most common form of revolving credit is a credit card from Visa. This is the amount of credit a lender will extend to you. Interest is calculated on the principal. This is usually expressed as interest. Finance charge.Lenders extend credit because. Credit rating. in return. Your credit rating or credit history is a summary of your bill-paying behavior over a number of years. Open end credit. and your credit rating. Credit line. always add the interest costs to determine the true cost of what you are purchasing. Principal. they expect the original loan amount plus a finance charge for the use of the money. When using credit to make a purchase. This indicates the actual cost of a loan per year. Installment credit. Interest is a charge for a financial loan. Revolving credit. With a revolving credit agreement. and your credit rating. etc. APR (Annual Percentage Rate). a new credit card may come with a credit line of $1. For example. Credit of this type includes some credit cards. such as American Express and Diner's Club. The credit agency then produces a credit report. You promise to repay the full balance owed each month with no finance charge added if the bill is paid in full when due. 4101. Credit Terminology Before diving into this topic. a percentage of the original loan amount (called the principal). Any place that you apply for credit can access the credit report. usually a percentage of the amount loaned. It combines the interest charged and any fees. When comparing the costs of loans. as well as utility and telephone bills. Since the goods purchased are used as security for the loan.

but when you compound it on an annual basis.4102. It may be used to meet emergencies. in some cases. Interest costs. Impulse spending. Credit can also allow you to take advantage of bargains. It helps you establish a credit rating. Determine If You Should Borrow and Use Credit Despite the Disadvantages The advantages of using credit include: It's convenient. these sometimes charge 1 1/2 to 2 percent as a "finance charge" (interest) on the unpaid balance of your account per month. can pay triple for their houses. as long as you need the item and you do not pay more in interest than you save on the item. You can get earlier use of an item. only carry your credit cards when you actually plan on purchasing an item or service on credit. Because companies charge to lend you their money. You pay extra in interest and it is so easy to use. always add interest costs to the cost of what you are investing in. Banks and finance companies charge lower interest rates for large loans for cars and houses than other businesses that deal with time-payment plans like department stores and oil companies. it encourages unnecessary spending! a. and 2 becomes 24 percent! b. it encourages unnecessary spending. This doesn't sound like much. To avoid such spending. 1 1/2 percent becomes 18 percent. For example. You may get better service on an item. people with 30-year mortgages. There are two main disadvantages to using credit. or bank credit card companies such as VISA and Master Card. What are two disadvantages of using credit? ______________________________________________ ______________________________________________ (Answer: Interest costs and impulse spending) 4-3 . Probably the biggest disadvantage of credit is that it's so easy to use.

52.) Look at table 4-2 showing comparisons between interest and payment periods. try to pay off debt in advance and even save the amount in your budget allotted to credit payments! Can you summarize the guidelines for using credit in one or two sentences? __________________________________________________________ __________________________________________________________ (Credit guidelines are to shop for the lowest interest rate. follow the guidelines listed in table 4-1. consider whether you are making a wise investment.56 instead of $385. Make sure the payment will fit into your budget! Always try to reduce debt. or both! Set monthly credit spending limits. It would be very discouraging to wind up paying for something outdated or worn out! Put as much down as you can Monthly limit Reduce debt The larger the down payment. But. and always try to reduce debt. the less your payments will be. and the fewer the number of months you must make payments. pay as much down as you can. the payments are smaller. Table 4-1. Resist the temptation to keep buying the most you can on credit! Instead. Credit Guidelines ACTIONS TO TAKE Shop around Pay cash REASONS Find the lowest interest rate! Consider paying cash. set a monthly credit-payment spending limit. See how much more it would cost you to buy a car on credit for 48 months instead of 36? Sure. consider paying cash. Ensure it's a wise investment Make sure it is a wise investment. they would be $490. Maybe the investment is not really necessary right now or you could save up and pay for it with one or two paychecks.4103. at 10 percent. you're paying an additional $845 for those smaller payments! 4-4 . Six Guidelines for Using Credit If you decide to use credit.

) Charge cards offered by department stores and oil companies. Examples: Amex. Although credit cards may be convenient. with the amount you spend automatically deducted from your account.783 20.660 18. Table 4-3 lists some easy and sensible precautions you can take to safeguard your credit cards and protect yourself from credit card fraud. Examples: Texaco.Table 4-2. Carte Blanche Debit work like checks. Federal laws help protect you.969 19.000 and confinement up to ten years. A court can punish a person who illegally uses a credit card with a fine of up to $10.432 22. Interest Comparison Chart PAYMENT PERIOD INTEREST 10% 15% 18% 20% 4104. Examples: Visa. Sears. Pennys.505 20. but you could forget to write the amount you take out in your register. 36 MONTHS $17. provided you pay the minimum due. but normally can be used only to buy products from the issuing company. Examples: Any bank debit card. Credit Cards The following types of cards are generally lumped into one category: Credit cards allow you to pay back what you borrow at your own pace.336 PAYMENT PERIOD 48 MONTHS $18. They work the same as credit cards.202 4-5 . An unscrupulous person could use your card and run up thousands of dollars of charges. Discover Time and Attendance (T&A) cards require you to pay the amount in full each month. MasterCard. Optima.305 21. Diner's Club. so be careful that you do. but they do not charge interest. (Note: not really credit. etc. the danger of loss or theft requires you to take good care of them.

Get rid of any card you no longer use. the house itself is the collateral. EXPLANATION When you sign your credit card. d. (Answer: a. For a lender to secure a loan using collateral. Keep a list of your credit cards and use as many different cards as possible. In most cases. Safeguard Your Credit Card PRECAUTION Sign your credit cards. when a loan is obtained to buy a house. Which of the choices contains two of the six guidelines for safeguarding your credit cards? a. Know where your credit cards are. make sure you have a special place to keep any cards you use and that you return them when done. it may act as a deterrent. Sign your credit cards and carry them with you always.Table 4-3. the collateral is the property bought with the borrowed money. b. Ask for any carbons from your charge slip. anyone who finds the card will have to forge your signature to use it. Although this may not stop the illegal use of the card. Keep this list (including account numbers) in a safe place and check your cards against it to make sure none is missing! If the company does not require it back. Check your credit card slips. Loans A loan is a type of credit and is defined as a sum of money lent at interest over a period of time.) 4105. Here are some terms you should know: Collateral is property used to secure the loan. the borrower must make a pledge of property in case he doesn't repay the money borrowed. Never obtain more than one credit card and know where it is at all times. Keep a list of cards you use. Check your credit card slip and ask for the carbons from your charge slip. cut it into little pieces and throw it away! Make sure the amount(s) is/are correct and that the total amount is in the "total" block. c. 4-6 . Do not leave any cards lying around. An unscrupulous person could use one of those carbons to make a card with your name. For example.

Are you reliable? Do you pay your bills? You may be asked for references or the names of other creditors. Capacity. with possibly more total interest being paid. the loan is called an "unsecured loan. Do you have enough assets? (If collateral is not necessary. you can contact the bureau and receive a report on your file. the cosigner must repay the loan. when a loan is secured by a cosigner and the borrower defaults on the loan. in writing. Character. For example. creditors have 30 days to respond to your application. that he. 4-7 . Is your income enough to pay the debt? What about other expenses? c. They must give you a reason for denial. Collateral. Choosing a Financial Institution For Obtaining a Loan Consider these factors when choosing a financial institution for obtaining a loan: Credit rating requirements Interest and fee charges Use table 4-4 to help you compare financial institutions for obtaining a loan. Lenders look for the "3 C's" which are a. but the loan often involves a longer repayment period. 4106. When you apply for a loan. If it's based on information from a credit bureau. Consolidation loans are intended to help consolidate many debts into one debt and should be avoided if at all possible. b. the cosigner. is legally responsible to repay the loan if the borrower does not repay it. another responsible person makes a pledge. Your monthly payment for a consolidation loan may be smaller than the total of many monthly debts. if collateral is pledged A word of caution: avoid loans designed to consolidate your debts.") When you take out a loan you sign a loan agreement that should state The total number of payments and their amounts APR and total finance charge Security agreement.Cosigner. For a lender to secure a loan using a cosigner.

Here are some terms you should know: Promissory note. In addition to the promissory note. When you borrow money.) You want to take out a loan.Table 4-4. Therefore. to pay the lender a sum of money. 4-8 . Loan Contracts Although federal laws provide some protection to you as a borrower." This note is a written promise by you. Financial Institution Comparison TYPE Credit Union ADVANTAGES Possibly small down payment (on autos) Low interest rate Low interest rate Easy to obtain a loan (doesn't require as high a credit rating as other institutions) DISADVANTAGES May require a member to maintain a share balance equal to their monthly loan payment Requires a much higher credit rating than other institutions May have highest interest rates May have prepayment penalties Commercial Bank Finance Company What is the definition of collateral? a. b. the borrower. d. c. the lender may require the loan to be secured. you need to know all the facts about your loan and understand your loan agreement. the lender wants some assurance that you are going to repay the loan. A disclosure of payment schedule by the lender A pledge of someone who is legally responsible for a debt if you do not pay it A pledge of property made by the borrower to secure a loan A processing fee charged by the lender for conducting a credit check (Answer: c. Which financial institution would make it easiest for you to obtain a loan? ________________________________________ (Answer: Finance company) 4107. but do not have a good credit rating. you must usually sign a "promissory note. either when the lender demands it or at an agreed time.

A loan can either be "secured" or "unsecured. also known as the Truth in Lending Act. The small early payments may look appealing. or furniture before moving to a new duty station!) Confession of judgment clause Also known as an acceleration clause. these clauses are illegal in most states. Undesirable Clauses UNDESIRABLE CLAUSE Balloon payment DESCRIPTION Requires you to pay off the debt with a large final payment (after smaller early payments). Any requirements for credit life or health and accident insurance.Secured loan. If it is necessary for you to obtain a loan." A secured loan provides protection to the lender. (Fortunately. is a statement that legally admits you are in the wrong if you miss a single payment. The Consumer Protection Act. In that case. but if you cannot pay off the large one at the end of the contract period.) 4-9 . Prepayment penalty Describes how much you will be penalized for deciding to make larger clause payments to pay off your loan before the original term ends. requires a lender to give full disclosure of all costs of the loan including: (a) (b) (c) The annual interest rate and the total amount of interest you will pay during the life of the loan. (A penalty could really hurt if you wanted to sell your car. Whether the lender will require security depends on the amount you want to borrow and whether you are a good credit risk. The protection is provided through the borrower pledging something of value as assurance that he will repay the loan. Any separate fees for investigating your credit or handling your loan. Table 4-5 gives a list of undesirable clauses you need to be aware of. you could lose the property that was security for the loan. Truth in lending. home. Table 4-5. you must immediately pay off the entire amount due or give up your legal rights. you should be on guard for some undesirable clauses in your loan contract. Loans are usually secured through collateral or a cosigner.

4-10 . The fewer cards.) What are three undesirable clauses to avoid when making a loan agreement? a. -----------------------------------------------------------------------------------------------------------------Lesson 2. the easier (and safer) for you! In the next lesson you will learn about what to consider before purchasing a motor vehicle. PURCHASING A MOTOR VEHICLE LEARNING OBJECTIVES 1. prepayment penalty clauses. Financing major purchases combines information you have seen in this course--setting goals and objectives. 2. and obtaining a reasonable loan from a reputable institution.What is a promissory note? _______________________________________________________ (Answer: A promise by the borrower to repay the lender.______________________________________________________ b.______________________________________________________ c. Identify two precautions to take when signing a buyer's contract for a motor vehicle. and confession of judgment clauses) Lesson Summary. using credit wisely. Has this lesson given you food for thought? Do you think you can apply the guidelines for using credit to make practical decisions regarding what to use credit for and what to save for? Will you know which type of financial institution to apply to if you need to arrange for a loan? Do you know what kinds of clauses in a loan agreement to avoid? Don't forget to keep careful track of all your credit cards. Identify five extra expenses incurred when purchasing a motor vehicle.______________________________________________________ (Answers: Balloon payments. financial planning and budgeting.

Make sure you understand how the financing works. motorcycles. This requires you to pay a registration fee. including legal bills. the liability components of your policy protect you against bodily injury and property damages caused to third parties in the accident. you must register the vehicle with a state (normally the state of your permanent residence). or vandalism. or state may also require you to pay a property tax at this time. flood. When you buy a motor vehicle.Two major purchases for which you may need to use credit are motor vehicles and real estate. and will take your driver's license as well as fine you if they catch you without it. Before you buy that red Camaro. you may be required to pay an annual license renewal fee. many states require you to pay a one-time state sales tax to obtain the title registration and license plates.) theft. The insurance covers repairs to other cars in an accident in which you are liable. Your county. trucks. etc. Insurance costs are high and rising. that dream machine could make your life a financial nightmare. Insurance rates vary from state to state. Taxes (sales and personal property). Each of these taxes could be hundreds of dollars (based on the value of your vehicle). Your lender will usually require you to have comprehensive insurance. Five Extra Expenses in Purchasing a Car Listed below are the 5 extra expenses in purchasing a car that you must consider before "signing on the dotted line. city. Some types of insurance you should have when owning a motor vehicle are: (1) Personal liability. you get your vehicle's registration and license plate. vans. Registration. (2) 4-11 . Insurance. Therefore. Otherwise. the "motor vehicle" category legally includes cars. In terms of taxes and insurance. recreational vehicles. Some states require this insurance. and in some instances. After purchasing your motor vehicle. consider the extra expenses beyond the selling price. your insurance costs will probably be exceptionally high. if you are in this age bracket. c. boats. 4201. It is a fact that first-time car buyers think their car will cost only one-third of its full cost. If you are personally at fault (liable) in an accident. Also. Comprehensive. you'd better plan for all the costs of ownership. and in return. Before you buy a car or house. but are usually higher for persons under the age of 25. but will not cover your car. so be sure you find out the rate of taxation in advance and include provision for taxes in your budget." a. This covers repairs for damage caused by weather (hail. b.

Now that you have figured in the taxes. Most lenders require this insurance. registration. Your car is going to get 11 miles to the gallon of gas. insurance. d. and operation/maintenance) 4202. add in the actual costs of operating the vehicle. Before purchasing a motor vehicle. Repairs. get legal assistance. examine your legal contract. registration. 4-12 . a consumer fraud agency. you can be certain that sooner or later something is going to fail. e. Sometimes these can cost more than the original purchase price of the motor vehicle. too. or a state regulatory agency. If you have any questions. These costs depend on the number of miles you'll drive and the type of driving you do._________________________________________________________ e. repairs.(c) Collision. Operation/Maintenance. tune-ups and tires. Precautions To Take When Signing a Contract to Purchase a Motor Vehicle Whether you are buying a new or used car. Examples of these costs are oil._________________________________________________________ c.00 to travel 200 miles. insurance and repairs. This covers the cost of vehicle repairs after an accident and insures the lender against the loss of his asset (the motor vehicle) in the event of an accident. A part that fails translates into costly component repairs or replacement._________________________________________________________ d. gasoline.00. Consider all these facts before committing yourself to a 5-year loan! What five extra expenses will you have to add to your budget (beyond your monthly loan payment) when you buy a motor vehicle? a. The cost to replace the four tires on your new red Camaro is approximately $422. which means it is going to cost you approximately $28._________________________________________________________ (Answers: Taxes._________________________________________________________ b. When you own and operate a motor vehicle. always check the seller's record with a consumer protection organization such as the Better Business Bureau.

Before signing, check that All verbal sales "promises" for any contract are written into it. Any blank spaces on the contract are crossed out (so the salesperson will not be able to add something later). In addition, when buying a USED motor vehicle, check to see that the dealer has placed a "Buyer's Guide" in the window with information about the following: a. b. c. Any warranty (or an "implied" warranty) coverage Your rights to inspection by a mechanic of your choosing Any potential problems to look out for in a used car

Do you remember what two things you should look for when signing any contract? a.___________________________________________________ b.___________________________________________________

(Answers: Any promises should be in writing and any blank lines should be crossed out) Lesson Summary. This lesson listed some areas to consider before purchasing a motor vehicle. As you can see, there is much more to buying a motor vehicle than driving it off the lot! The next lesson presents considerations for purchasing real estate.

Lesson 3. PURCHASING REAL ESTATE LEARNING OBJECTIVES 1. 2. 3. Identify three family needs to consider before house-hunting. Identify three preliminary settlement expenses (in addition to mortgage payments). Identify five types of mortgages.

When purchasing a home, be prepared to make many big decisions and expensive commitments. Become informed and make your plans first! 4-13

4301. Consideration Factors in Purchasing a Home Here are some factors to consider when purchasing real estate: a. Savings plans. How much of your savings do you want to invest for the down payment and standard moving expenses (which can be very high)? Next, consider looking realistically at your prospects for income. If you are in a highly specialized field, can you reasonably expect to find work for the foreseeable future? b. Family needs. (1) (2) Location. What are your family's needs in terms of location? Community services. What types of community services do you consider necessary for your life style? Condition of property. How much work are you prepared to do on your house?


Exactly what is a mortgage? It is the monthly payment for the money borrowed to buy the real estate. This monthly payment includes interest charges, taxes on the property, and any insurance coverage. Think for a moment in terms of risk. If illness or some other type of disaster strikes, you could be unable to make a mortgage payment on time, or perhaps at any time. The wise and safe idea is to minimize the risk of losing your home by keeping a financial "cushion" and by careful planning. When you have considered all these factors, you will be able to compare types of mortgages and decide which is the best type for your personal financial situation. The three family needs to consider before house-hunting are location, community services, and ___________. a. b. c. d. Zoning restrictions Size of the property Condition of the property Real estate

(Answer: c.)


4302. Consider Preliminary Settlement Expenses "Settlement" is the legal term for the meeting between you, your lawyer, the seller and his or her lawyer to transfer ownership of real estate. During settlement there are various costs that must be paid to finalize the purchase of the home. Prepare to pay these types of costs at settlement. a. Down payment. Amount of money that you pay up front toward the purchase of your home. The larger the down payment, the smaller your monthly mortgage payments. b. "Points" on mortgage loan. Points are up-front interest charges levied by banks and mortgage companies. One point represents one percent of the amount. Example: On a loan amount of $100,000, the bank might state an interest rate of "7.5 percent plus 1 point." In this case, the one point would be $,1000 and would be paid up-front, usually at closing. c. Closing costs. Miscellaneous charges, adding up to hundreds of dollars, for immediate taxes and legal fees and for establishing your escrow account. Your escrow account is used to pay future annual or monthly taxes and insurance. What are preliminary settlement expenses that you should be prepared to pay when you buy a house? ______________________________________________________ ______________________________________________________ ______________________________________________________

(Answer: Down payment, "points," and closing costs) 4303. Mortgages You must obtain a mortgage when you purchase a home on credit. A mortgage is the monthly payment for the money you borrowed to buy the home. Your mortgage payment includes interest charges, taxes on the property, and any insurance coverage. A mortgage is a long-term commitment. When you buy a home with a mortgage, it is risky. If illness or some other type of disaster strikes, you could be unable to make a mortgage payment on time, or perhaps at any time. The wise and safe idea is to minimize the risk of losing your home by keeping a financial "cushion" (remember your savings?) and by careful planning.


VA also requires a down payment for a home or condominium if the purchase price exceeds the reasonable value of the property or the loan has a graduated payment feature. and unremarried surviving spouses. veterans. VA guarantees loans made for the purchase of refinancing of homes. VA requires a down payment for the purchase of a manufactured home. reservists. the lender is protected against loss up to the amount of the guaranty if the borrower fails to repay the loan. even without a down payment if the lender agrees. With a VA guaranty. as this is the average turnover period in real estate.The Veteran's Administration (VA) guarantees loans made to service members. Consider your needs from now through the next 5 to 10 years. a big question is. alter or improve a home Refinance an existing home loan Buy a manufactured home with or without a lot Buy and improve a manufactured home lot Install a solar heating or cooling system or other weatherizaton improvements Purchase and improve a home simultaneously with energy-efficient improvements Refinance and existing VA loan to reduce the interest rate and make energy-efficient improvements Refinance a manufactured home loan to acquire a lot Eligibility: Applicants must have a good credit rating with an income sufficient to support mortgage payments. complete VA Form 26-1880. Amount of savings expenditure. Table 4-6 shows five types of mortgages and their descriptions. "Request for Determination of Eligibility and Available Loan Guaranty Entitlement." and submit it to the nearest VA regional office. Outlook for income. you must consider how much of your savings you will want to invest for the down payment. To obtain a VA certificate of eligibility. Also. A VA loan guaranty can be used to Buy a home Buy a residential condominium Build a home Repair. Be sure to look realistically at your prospects for income. and agree to live on the property. permitting the purchaser to obtain a mortgage with a competitive interest rate. condominiums. "How much can I afford to pay?" You must consider the following: Present and future housing needs. While planning for mortgage payments you will have to make on your newly purchased home. VA guarantees part of the total loan. 4-16 . When shopping for a mortgage. you must consider how much you can spend on normal moving expenses (which can be very high). and manufactured homes.

there is one large payment for the original amount borrowed. The most undesirable kind of mortgage. For example: a 5-year graduated payment mortgage could work like this Year 1 2 3 4 5-30 Adjustable Rate Mortgage (ARM) Assumable Balloon Percentage Rate 5 5 1/2 6 6 1/2 7 Graduated payment Has an interest rate which generally begins at a lower rate and is adjusted at set time periods throughout the remainder of the mortgage--this interest rate can either increase or decrease.000. At the end of the duration of the mortgage. when you would have to pay the whole principal of $100. For example. Both of these factors are determined by the lender and borrower at settlement. Mortgage Types TYPE Fixed rate DESCRIPTION Has a fixed interest rate and fixed duration of time.) With an assumable mortgage. if you were to get a balloon mortgage for $100. then gradually increases to a certain point. Two examples of fixed rate mortgages: 30 years at 7 percent interest 15 years at 8 1/2 percent interest Has a variable interest rate that is lower at the beginning.000! Which type of mortgage is used in this example: Buy a house for $100. you take over the previous owner's mortgage payments.000 with monthly payments of $600 (but still owe the entire $100.Table 4-6. (ARMs have an annual cap and a lifetime cap. your payments would be only for the interest until your last payment.000 at the end of the loan)? ______________________________________________________ (Answer: Balloon mortgage) 4-17 . and then stabilizes. and is based on some type of monetary index.

Now. 3. Consolidate your loans into one big loan with one credit payment per month. deciding whether or not you are making a wise investment. Revolving credit a. Place your answers in the spaces provided. d. If you take your time to study the details. try your hand with the study unit exercise and see how much you can remember. Use credit to save your cash and postpone paying as long as possible. you will hopefully make very careful decisions. and setting a monthly credit payment spending limit are all guidelines to using credit wisely. You also covered the preliminary settlement expenses you can expect to incur during the process of buying real estate. The actual cost of the loan per year e. APR Credit rating Installment credit Principal c. paying as much down as you can. 2.Lesson Summary. Column 2 Definitions A line of credit that may be used over and over again b. List the two disadvantages of using credit (or borrowing). The original loan amount A summary of your credit history d. the course has a review lesson exam to help prepare you for your final exam. Matching: For items 1 through 5. b. you can only benefit. Considering paying cash. b. Now that you know all about the varied and complicated options available. Check your responses against those listed at the end of this study unit. After that. match the term in column 1 with its definition in column 2. c. Renegotiate new and longer terms of payment. Good luck! -----------------------------------------------------------------------------------------------------------------Study Unit 4 Exercise: Complete items 1 through 20 by performing the action required. Reduce credit debt whenever you can by paying it off ahead of time. In addition. What else should you try to do? a. a. Column 1 Terms ___ ___ ___ ___ ___ 1. 4-18 . ______________________________________________________ ______________________________________________________ 7. 4. This lesson discussed the three family needs to consider before beginning your house hunt. the lesson presented the major characteristics of five types of mortgages that are available to finance your house. Allows you to make monthly payments 6. 5.

10. d. and making a small down payment. Which one of the following is another? a. Character Capacity Collateral Cosigner Collateral Capacity b. d. checking credit card slips for errors. List three undesirable clauses to avoid when making a loan agreement. keeping a list of your credit cards. Credit union Finance company Commercial bank Savings and loan bank 11. Signing any credit cards you use. a.______________________________________________________ b. which kind of financial institution would you probably apply to for your loan? a. c. If you were in the military and wanted to buy a new motor vehicle using a loan with a low rate of interest. d. Charisma Collateral Cosigner Charm Cosigner Capacity c. _________. and asking for the carbons from sales slips when you charge are all precautions to safeguard your credit cards. and __________. a.8. Lenders look for the "3 C's" which are ________. Keeping all your unsigned credit cards together Carrying all credit cards with you always Using various cards instead of just one Making sure you don't ever leave one of your credit cards lying around 9. getting rid of any cards you don't use. b.______________________________________________________ 4-19 . c.______________________________________________________ c. b.

Two basic family needs to consider before starting your house hunting are the location of the house and the community services that are available.______________________________________________________ b. b. closing costs. b. If you were at settlement and had paid your down payment. real estate agent's commission system of credit sales tax escrow account 4-20 .______________________________________________________ e. d. What is a third? a. a.______________________________________________________ d.______________________________________________________ 13. Real estate company listing the house Zoning laws of the community Choice of available financing Condition of the property 15. c. c. List five extra expenses incurred when purchasing a motor vehicle. and utility deposits.12.______________________________________________________ 14. homeowner's insurance premium.______________________________________________________ b. d.______________________________________________________ c. you still would have to pay for your ____________ . List two precautions to take when signing any contract. points on the mortgage loan. a. a.

10. 20. 6. match the type of mortgage in column 1 with the letter of its description in column 2. You take over the previous owner's mortgage payments. Column 1 Type of Mortgage ___ 16. you learned the considerations you need to remember when you purchase a motor vehicle and real estate. c. 30-Year loan. a. e. 9. The interest rate is adjusted at set periods over the life of the loan. STUDY UNIT 4 SUMMARY This study unit emphasized applying guidelines to using credit when you make major purchases. d. 7. The interest rate starts low. 8. c. b. 4. Place your answers in the spaces provided. c. 3. a. Column 2 Description Low interest rates but risky. 5. because you pay the entire principal at the end of the loan. c. In lessons 2 and 3. 19. c. 4101 4101 4101 4101 4101 4102 4103 4104 4105 4106 4107 You pay extra in interest It is too easy to overspend-impulse spending Balloon payment Prepayment penalty Confession of judgement 4-21 . e. 2.Matching: For items 16 through 20. d. Adjustable rate mortgage (ARM) Assumable Graduated Balloon Fixed rate mortage a. d. In lesson 1. ___ ___ ___ ___ 17. but increases-for the first-time home buyer who expects to earn more later. a. 18. b. with a fixed interest rate and duration time. Study Unit 4 Exercise Solutions Reference 1. you examined some basic considerations in obtaining and using credit. b. b. a. 11.

b. Taxes Registration Insurance Repairs Operation/maintenance All verbal sales "promises" should be written in contract Any blank spaces on the contract should be crossed out 4201 13. e. d. d. 16. a.Study Unit 4 Exercise Solutions. d. b. 15. 19. c. a. d. a. e. 20. 4202 14. 18. b. 17. continued Reference 12. 4301 4302 4303 4303 4303 4303 4303 4-22 . c.

Legal Assistance Office Navy/Marine Corps Relief Circuit Court Police Department 3. Which of the following are the three categories of important papers? a. d. b. d. Where can you go for duplicating personal important papers? a. Desk at home. When you compete the review exam. check the referenced pages and restudy those topics. c. Select the ONE answer that BEST completes the statement or answers the question. military Titles. blacken the appropriate circle. When you are confident you know the course material. compare your responses with the answer key provided.PERSONAL FINANCIAL MANAGEMENT REVIEW LESSON EXAMINATION INSTRUCTIONS: The purpose of the review examination is to prepare you for the final examination. safety deposit box Lawyer's office. c. What are the three most secure types of storage areas? a. 2. c. registration. lawyer's office. For any questions you missed. b. 1. mortgages Who can direct you to the appropriate agency to locate a missing important paper? a. estate Social security. c. deeds. entitlement. special safe Special safe. personal Life insurance. d. lawyer's office. investment. try to complete the review exam without referring to the text or other references. office desk. Financial. b. office desk. b. safety deposit box R-1 . special safe Legal assistance office. After the corresponding number on the answer sheet. d. Libraries or commercial copying services Government offices Printing businesses or government offices Personal businesses 4.

d. The amount of money a policyholder must pay the insurance company periodically to keep the insurance policy in force is a/an ________. R-2 . What is a will? a. A motor vehicle A home Something of value which is owned Cash value 6. b. c. Tax bills Legal responsibility to pay a debt Mortgage commitments Credit card balances 7. What is the best and most complete definition of an asset? a. b. c. b. b. Choose the two sources available to you for legal assistance. d.5. d. b. c. d. option premium c. What is the best and most complete definition of a liability? a. b. d. S-1 office and company office Company office and legal assistance office Staff Judge Advocate's office and private attorneys Staff Judge Advocate's office and Navy and Marine Corps Relief office 8. What is a power of attorney? a. c. c. a. incentive settlement d. Document to choose an executor after death Agreement to control your assets after death Document to describe an estate after death Legal declaration distributing a person's possessions as desired after death 9. Power to buy assets on behalf of a lawyer Power to substitute for an attorney Written instrument authorizing an attorney to act Written instrument transferring your legal authority to someone else 10. a.

all active duty and retired military sponsors and all family members have to enroll in the ___________. To receive care in service hospitals or to have claims for civilian health care processed by Tricare. lapsed temporary d. whole life medical c. A term insurance you may elect 121 days after separation from the service is called _______ . b.11. d. whole life specific 15. a. Defense Enrollment Eligibility Reporting System Military/Dependent Health Benefits System Service Health Care Benefits Plan Military hospital or health facility within 75 miles R-3 . DOD insurance SGLI c. 14. b. a. b. a. time term c. a. c. VGLI Federal insurance 13. b. a. A life insurance policy that covers you for a specific time is called ________________ insurance. d. An insurance policy that provides coverage for the entire life span of the insured person is called _______________ insurance. term SGLI 16. SGLI permanent c. VGLI indemnity d. a. An insurance policy that has been terminated because payments were not made is called a _______________ policy. b. d. d. b. limited universal c. 12. A government-sponsored term insurance policy for all active duty personnel is called __________.

b. c. invested Service-connected.17. a. d. a. S-1/personnel office Your doctor Military hospital personnel office Tricare 19. b. d. GI Administration DOD c. 15 10 R-4 . d. Limited. Name the two types of disability pensions. c. b Good of Service Dishonorable c. b. Bill? a. b. Which agency administers the G. a. complete Divested. c. b. A veteran's spouse would be entitled to burial in a national cemetery if the _______. VA HUD 20. dentist S-1/personnel office Health Benefits Advisor (HBA) field XO 18. non-service connected Employed. Honorable General 21. 25 20 c. d.I. How many years of active service are required to qualify for retirement pay? a. unemployed 22. What type of discharge qualifies you for all G. Marriage lasted more than 10 years Spouse did not remarry a civilian Wish was documented in a (deceased) veteran's will Marriage lasted at least 20 years 23.I. The person who enrolls your family in the Tricare Active Duty Family Members Dental Plan (FMDP) is your ____________. d. d. d. b. Which system brings together the healthcare delivery systems and CHAMPUS? a. c. Bill benefits? a.

0% 62. b.5% 70. Have enough funds so you can go on vacation once a year.0% New Retirement Years of Service 20 21 22 23 24 25 26 27 28 29 30 Percent 40. If you were a sergeant who joined the Marine Corps after August 1986. Make sure you avoid the high cost of interest charged for credit buying. b. what would your "first-tier" monthly retirement salary be if your highest 3-year salary averages $2.5% 68. Final pay Two-tier c.0% 50.600 and you have completed 20 years of active service? a. $1140 $1100 c. d.0% 43.5% 47. R-5 .5% 75.5% 65.0% 52. Enable you to provide a financial security blanket for emergencies. What is the other main purpose? a. which plan would you use to calculate your monthly retirement allowance? a.0% 67. Percent 50.0% 72.0% 57. Using the retirement table below. d.5% 75. High-3 Disability 25.0% 71.5% 61.0% One main purpose for saving is to enable you to achieve your personal objectives. c. b.5% 54. $1045 $1040 RETIREMENT TABLE Old Retirement Years of Service 20 21 22 23 24 25 26 27 28 29 30 26.0% 57. d.5% 55.5% 60. Make sure you have enough funds in your account to buy a car.24.0% 64.

allotments. d. Interest is periodically added to and becomes part of the principal 33.27. mutual banks. d. Three factors to consider when choosing a financial institution for your accounts are terms and conditions. credit unions Finance companies. 31. What are four basic types of financial institutions? a. c. Payment to owners from the earnings of a company c. Amount of money paid for the use of money over a period of time d. Condition when total assets are more than liabilities e. What is the key to proper budgeting? a. b. savings banks 34. b. credit unions. credit unions. a. savings banks Commercial banks. financial rating asset/liability ratio insurance electronic capabilities R-6 . After the corresponding item number on the answer sheet. Column 1 Financial Term 28. credit unions. Navy Relief Disbursing. d. and variable expenses. savings and loan associations. Keep complete and accurate records. c. Matching: For items 28 through 32. Mutual banks. Compound interest Solvency Simple interest Dividend Collateral Column 2 Description a. savings banks. Evidence of property a debtor presents to a creditor to guarantee payment of a loan b. customer service. and _______. Add a certain amount to cover any miscellaneous expenses. 29 30. savings banks. 32. b. fixed. c. blacken the appropriate circle. Use estimated. Make sure you have correctly estimated your income. match each financial term in column 1 with the letter of its description in column 2.

treasury notes. b.35. b. b. "S" (savings allocation) Checking. tax-free Joint. a. Income distribution. Commercial. "B" (bond allocation) "S (savings allocation). d. b. d. c. look at blocks ______ and ________ of your LES. 29 and 30 39 and 40 39. 55 59 1/2 c. "S" (savings allocation). One special checking account service offered by some financial institutions is a bill-paying account. What is another? a. "B" (bond allocation). Keep a written record of expenditures Avoid carrying a large amount of cash around Simplify payment of financial obligations Organize a budget 40. managed. Insurance account to pay to insure your funds IRS account to automatically pay your taxes Use of credit cards to backup checking account Special tax free account R-7 . The most important reason for having a checking account is to ______. d. To verify the salary amounts and when they were deposited into your account. Which of the following systems are electronic deposit methods? a. treasury bonds. d. and IRAs. a. ATM IRS 36. company 41. What are the three basic types of checking accounts? a. c. CDS Automated c. Which is the fifth type? a. direct deposit Income allotment. "B" (bond allocation) 38. The minimum age at which you can draw funds from your IRA without penalty is ___. c. 20 and 21 24 and 25 c. direct deposit. direct deposit. Super NOW account Direct. residential. d. a. b. b. b. Here are four of the most familiar types of savings accounts: basic savings. business Regular. 60 61 1/2 37. d. c. individual. d. NOW account.

R-8 . d. b.42. c. They will help you keep track of your checks. You can use them to regulate your financial priorities. Why should you keep your deposit receipts? a. You can add them up to estimate your taxes. To prove you made the deposit.

Of the three following deposit slips.43. R-9 . c. which one has been completed correctly? a. b.

Which one has been properly maintained? a.44. R-10 . Below are three pages from a check register. c. b.

R-11 . which one has been completed correctly? a. c. b. Of the three following checks.45.

48. After the corresponding item number on the answer sheet. Column 1 Type of Endorsement 46. BLANK RESTRICTIVE SPECIAL MISSPELLED a. d. Column 2 Sample b. match each type of check endorsement in column 1 with the letter of the appropriate sample in column 2. R-12 . 47. c.Matching: For items 46 through 49. 49. blacken the appropriate circle.

is expensive to write a lot of checks. Set a monthly credit-payment spending limit. Make sure you know where all your credit cards are located. b. c. What is the most important thing to remember about a checking account? a. Use the following list of five precautions to take to safeguard your credit cards to answer item number 53. R-13 . Which of the following choices is the sixth precaution? a. d. One major disadvantage of using credit is that you pay extra in interest. b. c. Use a variety of cards instead of just one. Renegotiate new and longer terms for credit loans. complicates your bookkeeping. Always strive to reduce debt (by paying off loans ahead of time). is expensive to mail a lot of checks. and it becomes easy to make mistakes in computation. Get rid of any card you no longer use. b. your checking account funds will grow! 51. d. Consider whether or not the item is needed and will last. What is the sixth guideline? a. c. Consolidate your loans into one big loan with one credit payment per month. d. Use credit to save your cash and postpone paying.50. Shop around (for the lowest interest rate). 52. Consider paying cash (instead of charging). Keep a list of cards you use. Sign your credit cards. Pay as much as you can in the down payment. c. You can postdate a check if you know when you will have enough funds to cover it. Another is that it a. Use the five guidelines for using credit listed below to answer item number 52. Check any credit card slip. Keep all unsigned credit cards together. You must never write a check in excess of the amount in your checking account. Your checks are the safest and most convenient way to spend money! If you should lose your checks. Ask for any carbons from your charge slip. d. encourages unnecessary spending and debt. b. Carry all your credit cards with you always. 53.

and _________. Balloon. The type of financial institution that may charge the highest interest rate on loans is a __________. d. b.54. operation/maintenance. c. credit life insurance. a. Annual interest rate. When you sign a buyer's contract for a motor vehicle. and __________ . confession of judgment. a. b. accident insurance. a lawyer is present a mechanic is present you use a pen with black ink any blank spaces on the contract are crossed out 58. c. c. d. insurance. c. b. location of the property choice of available financing zoning laws of the community real estate company listing the house R-14 . The three things a family needs to consider about a house it may wish to buy are the condition of the house. loan handling. b. Balloon. the community services that are available. a. be sure that all verbal sales promises are written into the contract and that ____________. 56. When you enter into a loan agreement. repairs. road testing undercoating 57. confession of judgment (acceleration clause). a. b. d. When you purchase a motor vehicle. confession of judgment. balloon. it is wise to make sure these types of clauses are not in it: a. prepayment penalty. d. Prepayment penalty. credit union finance company commercial bank savings & loan association 55. be prepared for these extra expenses: annual registration. taxes repainting c. d.

it can either go up or down based on a monetary index The interest rate starts low but increases to a certain point and stabilizes Fixed interest rate and fixed duration of time determined by the lender and borrower a. 63. LAST PAGE OF REVIEW EXAM R-15 . Fixed rate mortgage Graduated payment mortgage c. If you were at settlement and had paid your down payment and points on the mortgage loan. match the type of mortgage in column 1 with the letter of its description in column 2. 64. You take over the previous owner's mortgage payments The interest rate begins low and is adjusted at set periods throughout the duration of the mortgage. 61. sales tax closing costs system of credit real estate agent's commission Matching: For items 60 through 64. d. e.59. After the corresponding item number on the answer sheet. 62. c. b. blacken the appropriate circle. you still would have to pay for your __________. Column 1 Type of Mortgage 60. a. Assumable mortgage Balloon mortgage Adjustable rate mortgage (ARM) b. Column 2 Description Low interest rate but risky because you pay the entire principal at the end of the loan d.

28. 2. b. a. d. 29. 23. 30. d. 3. 24. 17. d. 33. c. a. 9. 14. 20. 15. 18. b. 5. 39. a. c. b. b. 41. c. d. a. 37.Review Lesson Solutions Reference 1. 16. 42. d. a. c. 40. e. 6. b. c. 8. 26. 21. 12. b. b. 25. 7. b. 27. 4. b. b. 22. d. b. 32. R-16 1101 1102 1103 1104 1201 1202 1203 1204 1205 2102 2102 2103 2104 2105 2105 2202 2203 2205 2301 2302 2401 2403 2501 2501 2504 3103 3106 3201 3201 3201 3201 3201 3202 3203 3204 3204 3205 3206 3301 3302 3303 3305 . 34. c. 13. b. 35. 11. c. 31. a. a. 36. c. c. c. b. b. 38. c. 19. c. 10. c. d.

How long did it take you to complete this course including the review lesson examination? ___ Less than three hours If more than fifteen hours ___ Three to six hours enter number of hours ___ Seven to ten hours here: ______ ___ Eleven to fourteen hours Were the learning objectives stated at the beginning of each lesson clear? (Circle your response) a. Yes b. rank. and phone number. By completing this questionnaire. . If you circled "NO" please list below the study unit and lesson number for those unclear objectives. If you want to be contacted by the course instructor. Regardless of whether you want to be contacted or not. please enter your primary military occupational specialty (MOS). Additional comment sheets may be attached to this questionnaire. The course you have just completed has undergone extensive development and revision. No 2.MARINE CORPS INSTITUTE COURSE EVALUATION QUESTIONNAIRE MCI 34. please provide your name. your responses may result in a need to review the course.20e Personal Financial Management Directions: This questionnaire is extremely important to the Marine Corps Institute. YOUR HELP IS NEEDED. As an integral part of the continued success of this course. Please take five minutes to complete the questionnaire and return it to MCI in the self-addressed envelope provided with your course materials. Information About YOU: Name (Optional) Rank MOS Telephone Number (Optional) DSN Commercial (Area Code) Information About the COURSE: 1.

____ Enter Study Unit Nos. tables. that is illustrations. Yes b. Outdated procedures or process. ______ ______ ______ ______ ______ ______ ______ 4. and the study unit number below. Outdated equipment or material. Yes b.MARINE CORPS INSTITUTE COURSE EVALUATION QUESTIONNAIRE Information About the COURSE (continued): 3. Lesson Number ______ Study Unit Number ______ When you read the lesson the first time. is your recommendation based on (check all that apply): ___ ___ ___ ___ 7. Information not accurate. No If "NO" please list the lesson number and/or paragraph number below. Would you recommend that a revision be made to any portion of this course? (Circle your response) a.. No If "NO" please list the exercise question/item number. (Attach additional sheet. Other (Please describe) Enter Study Unit Nos. ____ Comments: Please attach separate sheet. Yes b. No If "YES". if necessary) Question Number ______ 5. Yes b. Did the figures. the lesson number. ____ Enter Study Unit Nos. ______ ______ ______ ______ ______ ______ ______ ______ 6. did it make sense to you? (Circle your response) a. . ______ Did the exercise at the end of a lesson or study unit test your skills and knowledge gained by studying the lesson? (Circle your response) a. No If you circled "NO" please list the figure or table number(s) below. charts. photographs. etc. clearly support the information/text within the lesson? (Circle your response) a.

63. d. 59. c. d. 46. c. a. b. c. 49.Review Lesson Solutions--continued Reference 43. a. 53. 3305 3305 3305 3306 3306 3306 3306 3308 4102 4103 4104 4106 4107 4201 4202 4301 4302 4303 4303 4303 4303 4303 R-17 . 47. 62. 56. a. 50. d. b. a. 58. a. 60. a. 54. 55. e. a. a. 48. a. b. b. d. 52. 45. 57. 44. b. 51. 64. 61.

Before mailing. fold the form and staple it so that MCI's address is showing. NAME RANK MOS COMPLETE MILITARY ADDRESS (INCLUDING RUC IF KNOWN) TELEPHONE NUMBER DSN YOUR QUESTION: COMMERCIAL (Area Code) INSTRUCTOR'S RESPONSE: . or the review lesson exam item you are having a problem with.MARINE CORPS INSTITUTE COURSE CONTENT ASSISTANCE REQUEST MCI 34. Your question(s) will be answered promptly by the Distance Training Instructor responsible for this course. lesson exercise item. Write out your question(s) and refer to the study unit.20e Personal Financial Management Use this form for questions you have about this course. Additional sheets may be attached to this side of the form.

301. Failure to provide your Social Security Number will delay the processing of your request/inquiry . USC. Information is needed by MCI to act/respond to input provided in Section 2. a new enrollment must be requested) Request New Enrollment ______ OTHER Requested Action: AUTHORITY: Title 5. LAST NAME MOS RUC SOCIAL SECURITY NO.R-11 (3/96) MCI 34. STUDENT REQUEST/INQUIRY INSTRUCTIONS: Complete only those sections requiring an action/response from MCI. PRINCIPAL PURPOSE: The Student Request/Inquiry is used to transmit information concerning student participation in MCI courses. MILITARY ADDRESS (INCLUDE ZIP CODE) (Reservists may use civilian address) SECTION 2.) DATE: _______________ RANK FIRST NAME MI. FROM: CHANGE NAME: RANK: SSN: RUC: NAME: RANK: SSN: RUC: TO: The following materials are needed: Lessons: Manual: Answer Sheets: Others: Final Exam Overdue: Lesson sent to MCI on ___________ Missing Diploma or Completion Certificate: The course or program was completed (day) ________ (month) ________ (year) ________ Exam sent to MCI on ____________ Request Extension _____ (Students are only eligible for one extension prior to their Course Completion Date (CDD)) Request Reenrollment _____ (Students are only eligible for reenrollment once and only after their CDD. Sec. In some cases information contained therein is used to update individual student records maintained by the Marine Corps Institute. Failure to provide information may result in the provision of incomplete service to your inquiry. . If already reenrolled and disenrolled. MANDATORY OR VOLUNTARY DISCLOSURE AND EFFECT ON INDIVIDUAL NOT PROVIDING INFORMATION: Disclosure is voluntary. ROUTINE USES: This information is used by MCI personnel to research student inquiries. Use of your Social Security Number is authorized by Executive Order 9397 of 22 Nov 43.20e Personal Financial Management SECTION 1. STUDENT IDENTIFICATION INSTRUCTIONS: Print or type clearly: (Section 1.MARINE CORPS INSTITUTE--STUDENT REQUEST/INQUIRY-MCI .

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