Author: Omen Quelvog, CFP®, MQFP®

Why Insurance Companies Are Totaling More Cars (And What You Can Do)

Post author By Omen Quelvog, CFP®, MQFP®
Post date May 19, 2026

We were at a high school band fundraiser and came out to a fun surprise: someone had backed into our passenger door and left a dent. What we thought would be a minor repair ended up being declared a total loss by our insurance company. My husband was surprised, but as a financial planner, I’d seen many clients come back with the same unexpected verdict from insurance adjusters.

The damage didn’t look catastrophic, and the vehicle was drivable, but the insurance company was not swayed by our pleas of, “Please kind sir, this was going to be the old car we were going to give our teenage driver next month.”

This isn’t just anecdotal. Across the insurance industry, the share of vehicles declared total losses after accidents has been steadily rising. Understanding why reveals a lot about how cars and the economics of repairing them have changed.

The Economics Behind a Totaled Car

Insurance companies don’t total cars arbitrarily; their decision is usually based on a simple calculation: if repair costs approach or exceed a certain percentage of the vehicle’s value, the insurer will declare it a total loss.

Traditionally, this threshold has been around 70–80% of the car’s pre-accident value, though it can vary by state and insurer.

For example:

Vehicle value: $12,000
Estimated repairs: $9,000

Even if the car is technically repairable, it may be cheaper for the insurer to pay the vehicle’s value and sell the damaged car at a salvage auction. In some markets, insurers are applying lower thresholds (sometimes 50–60% of the car’s value for older vehicles) making total-loss decisions more common.

Modern Cars Are Much More Expensive to Repair

Age plays a significant role in total-loss decisions. Since insurance payouts are based on actual cash value, older vehicles are worth less, which means even minor damage can exceed the total-loss threshold. You might think that this would make modern cars less likely to be totaled, but unfortunately, that’s not the case.

One of the biggest drivers of this trend is technology. Today’s vehicles contain a growing number of electronic systems designed to improve safety and convenience, such as:

Radar sensors
Cameras for lane-keeping and driver assistance
Adaptive cruise control modules
Parking sensors
Sensor-equipped windshields and mirrors

These advanced driver-assistance systems (ADAS) can make even minor collisions costly to repair. Many repairs now require diagnostic scans and sensor recalibration, with specialized components, like adaptive headlights, costing over $1,000 each.

As vehicles become more complex, even a low-speed crash can generate a repair bill that pushes a car close to the total-loss threshold.

Parts Shortages and Repair Delays

Repair costs aren’t the only factor. Time is also money in insurance claims. If a repair takes weeks or months due to parts shortages, insurers often have to cover costs for:

Rental vehicles
Storage fees
Administrative costs

Supply chain disruptions have made certain parts harder to obtain, meaning repairs that once took two weeks can now take two months or more, dramatically increasing claim costs. Adding these extra expenses to the repair estimate can make totaling the vehicle the cheaper option.

The Role of the Salvage Market

When insurers total a vehicle, they usually sell it through salvage auctions. These cars are often repaired and resold domestically or exported overseas. Strong demand for used parts and repairable vehicles means salvage values have risen, making totaling a car financially attractive for insurers.

In effect, the insurance company may recover part of its payout by selling the damaged vehicle.

How to Prepare Yourself Financially

Maintain a Strong Emergency Fund

While it may be tempting to invest all your money in the stock market, it’s crucial to maintain an emergency fund with three to six months of living expenses in cash or cash-equivalent accounts. A totaled vehicle is a prime example of an expense that an emergency fund is designed to cover, including the need for a down payment on a new vehicle and possible rental costs.

Your emergency fund should be held in safer, liquid options such as high-yield savings accounts or money market funds. This money should not be invested in the stock market, where its value could drop when you need it most.

Understand Your Insurance Coverage

Not all insurance policies have the same coverage limits, which can significantly impact your financial protection in a total-loss situation. Review your coverage:

Liability Limits: These define the maximum amount your insurer will pay for damages to others in an accident you cause. If your liability limits are too low, you could be responsible for covering the difference out of pocket.
Collision and Comprehensive Limits: These coverages determine how much your insurer will pay for damage to your vehicle. Ensure your limits are adequate to cover potential repair or replacement costs, especially as vehicle values rise.

Reviewing and understanding your coverage limits can help you make informed decisions and better prepare for the financial implications after an accident.

Keep Records of Your Vehicle’s Condition

If your car is declared a total loss, insurers rely heavily on market comparisons to determine value. You can sometimes improve the valuation by documenting:

Recent maintenance and repairs
New tires or upgrades
Low mileage relative to similar vehicles

Keeping receipts and service records can help demonstrate that your vehicle was in above-average condition, which can influence the payout.

Avoid Being “Upside Down” on a Car Loan

One of the worst scenarios after a total loss is owing more on a loan than the insurance company pays. To reduce this risk:

Make a larger down payment when purchasing a vehicle
Avoid extremely long loan terms (such as 72–84 months)
Pay down the loan faster if possible

These steps can reduce the chance that depreciation leaves you with negative equity.

The Bottom Line

Modern vehicles are safer and more technologically advanced than ever before. But that same complexity combined with rising labor costs and parts shortages means cars are increasingly likely to be totaled instead of repaired after accidents.

For drivers, the key is preparation. Maintaining a strong emergency fund, understanding your insurance coverage, and avoiding excessive auto debt can make the difference between a manageable inconvenience and a serious financial setback if your vehicle is suddenly written off.

Working with a financial planner who understands the unique challenges of military families can prove invaluable. The financial planners at Military Financial Advisors Association understand your life and can help you develop a personalized financial plan, navigate complex financial decisions, and stay on track toward your family’s goals.

Estate Planning Military Retirement

Are You Down with SBP? (Survivor Benefit Plan)

Post author By Omen Quelvog, CFP®, MQFP®
Post date May 1, 2026

This blog present a framework for understanding SBP and its role in long-term financial planning

When military members retire, one of the biggest decisions they face is whether to elect the Survivor Benefit Plan (SBP).

Without fail, when this question comes up, strong opinions follow:

“You’ll never make your money back.”
“I’ve never heard anyone regret having it, but many regret not having it.”

And occasionally,

“This is an individual decision, you should review your numbers and your family’s situation before deciding.”

The last one!

Understanding whether SBP is right for your family isn’t just a math problem, it’s an emotional one too.

When deciding whether to participate in SBP, you are confronting:

Your mortality
Your spouse’s future
And the gap between the life you’re planning for… and the one that actually happens

It’s about making a decision you won’t lose sleep over.

All while transitioning out of the military and, likely, losing sleep over things like:

Where you’re going to live
What life after the military looks like
And, in a lot of ways, who you are without the uniform

So… it’s a lot.

What the Survivor Benefit Plan Actually Is

At its core, SBP allows a retired service member to provide ongoing monthly income to a surviving spouse or eligible beneficiary after death.

Coverage is up to 55% of retired pay
Payments are adjusted for inflation (COLA)

Without SBP, the pension stops when the retiree dies.

So Why the Confusion?

Most of it starts with how SBP is presented. SBP is introduced as something you have to pay for, and that framing immediately puts people on edge.

It feels like:

An extra cost
A bad deal
Or something being taken away (and honestly… sometimes it feels like the military has taken enough already)

But if we shift the framing, from a purchase decision (like insurance), which is where the word “premium” takes us, to a pension/income structuring decision (more like an annuity), it starts to make more sense.

At a basic level, when deciding whether to participate in SBP, you’re making a pension decision:

A higher monthly pension that lasts one life (yours)
Or a lower monthly pension that lasts two (you and your spouse)

Most defined benefit pension plans are required to offer a Joint and Survivor Annuity to married participants. That’s essentially what SBP is offering military families. What’s different isn’t the math, it’s the wording. Instead of presenting this as a reduced benefit that covers two lives, SBP frames it as something you must “buy into.”

What This Looks Like Outside the Military

Below is what a similar decision looks like in a civilian pension.

Option	Monthly Benefit
Single Life – Basic Benefit	$8,462
60% Survivorship Benefit	$7,839

There’s no “premium” language here.

Individuals simply see:

A higher benefit for one life
Or a lower benefit that continues to a spouse

SBP is doing the same thing, it just labels it differently. And that difference in language is where a lot of the distrust comes from.

Facts About SBP

SBP isn’t one-size-fits-all, it depends on who you’re covering.

Feature	Spouse/Former Spouse	Child(ren)
Premium Amount	6.5% of covered retired pay	Based on retiree’s age + youngest child’s age
Coverage	Up to 55% of retired pay	Up to 55% of retired pay
Inflation Adjusted	Yes	Yes
Premium Duration	Stops after 30 years & age 70	Stops when children lose eligibility

Important Note:

Spouse coverage = lifetime income protection
Child coverage = temporary protection

A Few Things That Make SBP Unique

Customization: Coverage can be elected in increments (not just all-or-nothing)
Paid-up feature: Premiums stop after 30 years and age 70, whichever is later.
Opt-out window: Between months 25–36 of retirement, you can withdraw (with spouse consent), though premiums already paid are not refunded

*The information above applies to active-duty retirees. Reserve component retirees are also eligible for SBP, though the timing and structure of their decisions differ.

SBP vs Life Insurance

Often, life insurance is positioned as an alternative to SBP, an “either/or” decision. But SBP and life insurance solve different problems, and in many cases, they can complement each other. Understanding the strengths and limitations of each can shift the conversation from “either/or” to “yes, and.”

Life insurance provides a lump sum that can be used to:

Pay off debt
Fund education
Cover large one-time expenses

But using life insurance for long-term income replacement introduces risk:

Market risk
Inflation risk
Behavioral risk
Longevity risk
And more!

SBP, on the other hand, is designed to provide inflation-adjusted income for life. Instead of a lump sum, your spouse receives a steady monthly income that continues for life. When life insurance is used for income replacement, the responsibility, and the risks, of making that money last stays with the family. With SBP, that risk is transferred to the federal government.
(On the civilian side, this would look like an annuity, where the risk is transferred to the insurer.)

Is SBP for Me?

SBP is valuable, but not universally necessary. You need to look at your specific situation and make sure you choose the right tool(s) for the job.

Some situations where SBP may be less critical:

Dual-military couples with two pensions
A spouse with strong independent income
Significant assets already covering income needs
Lower reliance on the military pension

That said, no single factor determines the answer. This is where working with a financial advisor can be meaningful.

A good advisor can look at the full picture: income, assets, risks, and help identify:

Gaps
Tradeoffs
And opportunities you may not see

Especially during a time when you already have a lot going on.

Final Word

This isn’t about SBP being good or bad. It’s about whether it’s the right tool for the job.

Do you need:

Guaranteed income?
Flexibility?
A lump sum?
Or some combination of all three?

The reality is, SBP decisions don’t happen in a vacuum.

They happen:

During a major life transition
With incomplete information
And under pressure to “get it right”

Don’t Make This Decision on Social Media

This decision deserves more than:

A hot take
Someone else’s experience
Or a strong opinion with no context

At a minimum, it should include:

A review of income needs
An understanding of available assets
A plan for the surviving spouse
And ideally, guidance from someone who understands military benefits

So… Are You Down with SBP?

Financial Planning Insurance Savings

I Have A Military Pension: Do I Still Need An Emergency Fund?

Post author By Omen Quelvog, CFP®, MQFP®
Post date February 10, 2026

I Have A Military Pension: Do I Still Need An Emergency Fund?

For years, the standard financial advice has been simple: Keep three to six months of expenses in cash for emergencies.

That guidance makes sense for households that rely entirely on earned income. But for many military retirees with a pension and especially those with VA disability, this rule of thumb deserves a second look. When a significant portion or the entirety of your mandatory expenses is already covered by guaranteed income, your emergency fund doesn’t need to serve the same purpose it does for everyone else.

Why the Traditional Emergency Fund Exists

A traditional emergency fund is insurance; self-insurance to be exact. You are accepting the risk that in the short term, you can fund yourself against two main risks:

Loss of income
Unexpected large expenses

For someone whose paycheck could disappear overnight, cash reserves are critical. The standard advice is 3-6 months’ worth of mandatory living expenses saved into a highly liquid account such as a regular or high yield savings account. If you have stable pay, two incomes, and/or low expenses, you may feel comfortable with a leaner, 3-month fund. Alternatively, a 6-month fund might be more appropriate for those supporting a family on a single income or with unstable/uneven pay. Even with the occasional government shutdown, a 3-month fund is often appropriate for those in the military. When you decide your time in the military is over, you may consider an increase to a 6-month fund due to changing incomes and expenses. In either case, the emergency fund is there to become your income in case your normal income stops unexpectedly or is insufficient to handle large, one-time expenses.

But for retirees with reliable income streams, that first risk looks very different.

Guaranteed Income Changes the Emergency Fund Math

Military pensions and VA disability compensation have unique characteristics:

They are reliable and predictable
They are not tied to employment
They adjust for inflation
They continue regardless of market conditions

So, what if those guaranteed income streams already cover your baseline needs such as a mortgage payment, utilities, food, and insurance premiums? How should you think about the amount you should keep for emergencies then?

From Income Protection to Event Protection: A Different Way to Size the Emergency Fund

Well first, perhaps take a moment to consider how exciting this is! Think about it:

Your guaranteed income covers your mandatory expenses.

Maybe I am naïve, but to me, this looks oddly like a definition of financial independence – at least maybe Coast FI. Sure, you might not be able to accomplish all the goals you set out for your life, but at minimum, you have the income you need to keep a roof over your head, food on the table, and gas in the car. Any income beyond that is icing on the cake!

With that out of the way, now we can consider our emergency fund amount. Remember, there were two purposes to an emergency fund, and we’ve just eliminated one of them – income sourcing. The second, covering the costs of unexpected bills, remains. This is where the shift occurs. Instead of thinking about this in terms of 3-6 months income, now we can think about this in terms of what’s the worst thing that can happen that I don’t already have insurance for.

A quick trip to ChatGPT generates some of the most common large-ticket expenses to plan for:

Home repairs such as HVAC or roof replacement
An engine or transmission on your vehicle
A significant health event (not covered by Tricare)
Unplanned travel

Given these types of expenses, anywhere between $20,000 and $50,000 would almost, if not completely cover the cost.

The Trade-Off: Cash vs. Opportunity

As you consider how much to store away for those potential large expenses, keep in mind that too much cash in savings can be risky. Even highest of the high-yield savings accounts are generally only staying even with inflation. That means that if you have a lot of cash in a savings account, you may not be earning enough interest to keep up with the value of the dollar or worse, you may actually be losing value over time.

Peace of Mind Still Matters

There is a comfort factor to an emergency fund. If you decide that $10,000 would cover the worst thing that could happen to you, but you still can’t sleep at night because the account value is too low, consider the amount that would help you sleep at night. So your new number doesn’t become arbitrary, try to consider why your new number makes you comfortable. Quite often, we have a tendency to create the worst-case scenario in our mind, when in reality, our worst case scenario may not even happen – ever. Try to find a balance between your worry, anxiety, and the reality that an event may actually happen. If you find yourself getting to a number beyond $50,000 or so, perhaps shifting risk to an insurance company might be a more appropriate solution. Before you head to the nearest insurance agent, perhaps use an outside party as a sounding board for your idea.

Setting Your New Number

The key to establishing your retirement emergency fund is that it is personalized to you. With guaranteed income that covers your mandatory expenses, your emergency fund shifts from income protection to event protection; an added source of comfort and confidence to your guaranteed income. You get to set the amount balanced between what could happen, what helps you sleep at night, and the risk of too much idle cash. When aligned, your emergency fund does exactly as it is designed; it offers the ability to respond with clarity and control when life inevitably throws a wrench in your plans.

Are you reconsidering your emergency fund or even something more? A MFAA financial advisor can help.

Investing Military Pay

Rolling out of the military: Do I have to roll out of the TSP?

Post author By Omen Quelvog, CFP®, MQFP®
Post date November 5, 2025

Rolling out of the military: Do I have to roll out of the TSP?

Getting out of the military, whether at the end of your service, because you are retiring, or for any other reason, comes with a lot of decisions and moving parts. For those with a Thrift Savings Plan (TSP) balance, one of the most common questions among those getting out of the service is if they should roll their TSP account into something else such as another employer plan or an Individual Retirement Arrangement (IRA). While this article isn’t going to tell you what to do, it will give you a few considerations as you ponder your decision.

Keep your TSP account: It’s the easy button!

While you might be getting out of the service, your TSP doesn’t have to. You may not be able to contribute to it anymore, but you can certainly continue to adjust the allocation and watch your account balance continue to do what it always has – grow or decline in line with your allocation and market swings. If anything, in the landscape of decisions you “have to” make when exiting the service, this one does not need to be one of them. You can leave it for later.

Keep your TSP account: It’s inexpensive

Another reason to keep your TSP is that the TSP net expense ratios for the various core funds are relatively inexpensive compared to other employer plans and some other investments such as mutual funds and actively traded accounts. This is becoming more of a “push” with many Exchange Traded Funds having similar fees to TSP, but all in all, TSP is still low cost. When thinking about how much investment growth remains in your pocket, the net operating cost of any given investment is important to keep in mind. When the fees get too high, they chip away at your earnings.

Keep your TSP account: It’s protected

Don’t forget about some of the legal protections to keeping your investments in an employer plan. Unfortunately, bankruptcy is a reality for some and if you ever have to file for, with some rare exceptions, your TSP balance is protected from bankruptcy. This includes money that you roll into your TSP balance. Assuming the rollover was done correctly, money you roll into the TSP is now also protected, which brings us to a final reason to keep your TSP account balance.

Keep your TSP account: A backdoor Roth’s best friend

Keeping your TSP account open allows you to keep the option open to roll other pre-tax account balances into the TSP. Wait, into? Yes, into. Let’s assume you’ve been saving pre-tax dollars in your personal IRA. One day, you reach the income level where you can no longer do that so your financial advisor says to you, “we should look into a backdoor Roth conversion,” and you should! However, you have an IRA with pre-tax dollars that you are about to mix with after-tax dollars. While you can, the IRS has something to say about that. You’ll be subject to the pro-rata rule which states that you can’t cherry-pick just the after-tax contributions to convert into your Roth IRA. The pro-rata rule will determine the ratio of pre-tax and after-tax dollars and subject whatever amount you convert to Roth to that ratio. Pro-rata, although manageable, can make your Roth conversions and tax efficiency unnecessarily complex. Fortunately, the TSP allows IRA rollovers into the TSP. This means that before you begin contributing after-tax dollars to your Traditional IRA, you can clear your pre-tax contributions out by rolling the balances into your TSP, thus giving you a clean Traditional IRA account without subjection to pro-rata.

Rollover your TSP account: It’s not very flexible

There are some decent reasons to roll your TSP contributions out into another employer plan or IRA, the first of which is control. No, you aren’t losing control of your money, but you do give up quite a bit of flexibility control. For example, let’s say you’ve got an allocation either within one of the many Lifecycle funds or even your own mix of C, S, I, G, and F core funds. You decide that you are ready to begin your regular distributions or have even reached the point of requirement minimum distributions (RMD). Ideally, you would distribute from fixed income allocations leaving equity to continue to grow. You won’t be able to do that in the TSP. The TSP will take a pro-rata (there’s that word again!) distribution across your entire allocation.

Rollover your TSP account: It’s Not Friendly To Contingent Beneficiaries

Another area where you lose control is after you’re gone. If you have a spousal beneficiary who outlives you, your spouse will inherit your TSP through what is known as a Beneficiary Participant Account. However, if your spouse passes or if you don’t have a spouse, your next beneficiary, a non-spouse, is not allowed to have a TSP account. They will instead have 90 days to make an election to have their TSP benefit rolled into an inherited IRA or else a check be written for the full balance which cannot then be rolled into an inherited IRA. This could be significant tax problem in the year of receipt, depending on the balance received. In the government, 90 days is not a lot of time to get anything done and this could turn into a complete tax disaster.

Rollover your TSP account: Limited Investment Options

One more area of control has to do with the TSP fund options. While the TSPs core five funds have done well historically, they are limited to those five options. For instance, if you wanted to be a little more specific about value, growth, or blended equities, you can’t do that in the TSP. To find additional investment options, you would have to roll your TSP into an IRA where the whole wide world of investments is open to you.

Rollover your TSP account: You Might Forget It!

Lastly, and a reason less to do with control, is simply forgetting about the TSP. You might think to yourself that that could never happen, but weirder things have happened. Think about it. You get out of the military and go to work for someone else with a 401(k) employer plan. You also open a Roth and Traditional IRA. You’re married and your spouse has employer plan and their two IRAs. You have 4 kids and you open 529 accounts for them all. You also decide to open a taxable brokerage account. Before you know it, you have a dozen investment and bank accounts, it’s been 20 years since your military days, and you suddenly remember, “I’ve got a TSP!” While you likely haven’t lost any money, it probably also wasn’t optimized for growth and taxes over the last 20 years. Rolling your TSP, or any employer plan “forward” into your current employer plan if they allow it, or your IRA, helps consolidate your accounts and simplify where possible

A Little Bit Of Both

There is a middle ground you might consider. TSP requires that you maintain an account balance of at least $200 or else they will close your account and send you a check. A strategy often used is to keep a $500 – $1,000 TSP balance to account for any market declines and roll the rest out into your employer plan or IRA. This allows you to take advantage of some of the key benefits of both. Just remember that by rolling money out of the TSP into an IRA, you then could lose some of the bankruptcy protections you would have by keeping your money in an employer plan. Also, be sure to set yourself a reminder for when you turn 65 to distribute or rollover whatever is left in your TSP account.

Do What Works For You

You don’t have to be in a rush making a decision about what to do with your TSP account. You can transition from the military and then come back to your TSP decision. You have options which include keeping your TSP right where it is. Just be aware that eventually, when you pass and if married, your spouse passes, your non-spouse beneficiaries will be forced to exit TSP. So, the real question is not if you roll your TSP balance out, but when will you do it? Stay in control and roll it out when it works best for you.

If you’re ready to explore the impact of TSP rollovers on your financial plan, an MFAA advisor can help. Find the profiles here.