60th Anniversary

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					               60 Anniversaryth
                2007 SPRING UPDATE
President’s Message
AFBA: A Distinguished Journey                               • Align association activities around the servicing of
Spanning 60 Years of Member Service                           our members’ needs.
AFBA is a non-profit association celebrating its 60th      Members will find a ballot enclosed. Please review and
anniversary. The Association formed in 1947 with           submit your vote.
the support of, then General of the Army, President        Associate Members
Dwight D. Eisenhower. AFBA is proud of its legacy
                                                           AFBA has expanded the eligibility of Associate
promoting the general and economic wellbeing of its
                                                           Members. Individuals who qualify for membership
members and their families during times of peace and
                                                           and acquire a product or service from one of the
war. AFBA has over 300,000 members which include
                                                           Association’s related enterprises (e.g., 5Star Bank,
individuals from the Uniformed Services of the
                                                           AFBA 5Star Funds) are now eligible. The AFBA
United States, Department of Defense, Department
                                                           newsletter is now sent to those who qualify for this
of Homeland Security, federal government and
                                                           new, expanded membership.
contractor employees, emergency first responders
(police, firefighters, and medical), and their families.   New Benefits
AFBA provides a wide variety of financial products         AFBA’s new benefits include a rewards program
and benefits. AFBA has $37 billion of life insurance in    through 5Star Bank’s credit cards and an alliance
force. The Association, to date, has paid life insurance   with Lincoln Financial Advisors Corporation
claims in excess of $1 billion.                            which offers full service financial planning.
Our Board of Directors’ Vision                             Additionally, the Association has an arrangement with
                                                           Life Line Screening to offer you discounted medical
Inside this issue is a listing of AFBA’s distinguished
                                                           screening tests. While AFBA’s core competency
Board of Directors. These individuals serve on the
                                                           continues to be low cost life insurance—with no war
AFBA Board providing the governance and vision
                                                           or terrorist restrictions—the Association is working
vital to the continued growth of the Association.
                                                           hard to provide additional products, services, and
AFBA’s Board approved a strategic plan in which it
                                                           benefits to its members. If there are any membership
initiated a set of “strategic imperatives” that includes
                                                           features you would like added, please do not hesitate
the following critical concepts:
                                                           to contact AFBA at 1-800-776-2322 or
  • Instill a member focus through membership                                          www.afba.com.
    service excellence.
  • Address life cycle financial needs by offering
    members targeted product suites at each stage of
    life.                                                                               Sincerely,
  • Emphasize select market segments by offering
    products tailored to the specific needs of groups
    such as the National Guard, federal government                                      Ralph E. “Ed” Eberhart
    and contractor employees, and emergency services                                    General, USAF (Ret.)
    providers.                                                                          President
The Advantage of Select Term                                   are fixed over a period of 10, 15, 20, or 30 years. This
Today’s servicemembers are eligible for life insurance         type of insurance is referred to as “fixed level term”
coverage of $400,000 SGLI and a $100,000 Death                 and enables the individual to buy term insurance to
Gratuity. In many cases this is sufficient for young           fulfill their needs over an extended period of time.
singles. AFBA’s Better Alternative policy is a great           So what is the bottom line on term insurance?
supplement if an active duty family desires additional         Generally, term insurance is the least expensive form
coverage at competitive rates.                                 of life insurance coverage. It is designed to furnish
When separating or retiring from the military, private         basic protection against the risk of death and is
sector life insurance coverage limits are generally            comparatively inexpensive when purchased at a point
much lower. On average, you can expect between                 in life when the probability of death is low. To ensure
$50,000 to $200,000 of life insurance coverage from            your family’s peace of mind, Select Term is the best
your employer. This means you may need additional              option if you are retired or separated. If you want
individual coverage to adequately provide for your             more information regarding term insurance, AFBA
total insurance needs.                                         offers several products with varying terms at very
                                                               competitive rates. Please visit AFBA’s website at
Your coverage options after retiring or separating             www.afba.com or call 1-800-776-2322.
include decreasing term and level term insurance.
This refers to the face amount of the insurance
coverage. Decreasing term policies provide a reduced
amount of coverage—for the same premium cost—at
each renewal period. For example, a $100,000
policy for a 35 year old, non–smoking male will cost
approximately $173 per year. By the time he is 50
years old he will continue to pay $173 a year, but his
insurance coverage will decrease to approximately
$50,000. With level term policies the amount of
insurance coverage remains the same over a period
of time; however, the cost of the insurance increases
as you get older. Some policies have renewal periods
                                       with premium            A Powerful Edge
                                       changes at each         for DoD Contractors
                                       specified period.       Two “Best in Class” insurance companies now have
                                       The premiums            an alliance that brings unprecedented integration
                                       are very low at         of worldwide life and medical coverage to deployed
                                       age 25 or 30 and        employees of DoD Contractors.
                                       increase at five
                                                               Medical insurance, offered through CIGNA
                                       year intervals
                                                               International, provides rich benefit designs and
                                       for the life of
                                                               comprehensive global coverage. Covered services
                                       the policy. A
                                                               include physician visits, vaccinations, chronic illness
                                       more popular
                                                               treatment, and routine maternity care.
                                       version of level
                                       term insurance          Group life insurance, offered through 5Star Life
                                       is one in which         Insurance Company, features coverage with none of
                                       the amount of           the traditional war or terrorism restrictions—and is
                                       the coverage            very competitively priced.
                                       and premiums

                                                           2
NEW Credit Card Rewards Program                              IMPROVED Online Credit Card Services
You asked and                                                We streamlined the online credit card payment
we listened!                                                 process and added features and user-friendly screens.
The result is                                                You can do it all online now: change your address,
My5StarRewards—                                              request a credit line increase, schedule a future
a rewards program                                            payment, or research your payment history. In
where you earn one                                           addition, safeguarding your account information
point for every $1 in                                        remains of paramount importance to us; and you
goods and services                                           may notice new security features on your next visit to
you purchase with                                            www.5StarCardServices.com.
your 5Star credit                                            IMPROVED Online Banking Services
card. Enjoy a choice
of today’s most                                              Our online banking services have a new look and
coveted rewards                                              additional features for the latest in convenience and
including:                                                   security. These include:

 • Free round-trip airline travel                              • More user-friendly screens
 • Cash back                                                   • Faster bill payment
 • Popular gift cards                                          • The ability to transfer funds from your 5Star
                                                                 deposit account to other institutions
 • Brand name merchandise
                                                               • Optional e-statements
We know you have many credit card choices, but here
are some important ways that My5StarRewards gives              • 24/7 support to reset a password
you more:
 • No blackout dates for air travel rewards
 • No limit on the number of points you can earn
    monthly or annually
  • No annual program fee
  • Hundreds of quality merchandise reward options
  • Over 30 gift card options for dining, shopping,
    and entertainment
  • Flexibility—choose a free gift card reward one
    time and cash back the next                              Check out our deposit products, current rates, and
We have made it easy. If you are a current 5Star             online services at www.afba.com.
Bank cardholder you are automatically enrolled. And
because we began this program January 1, 2007, you                             Coming Soon!
may already have reward points! Visit                          • New and used auto loans at nationally competitive
www.My5StarRewards.com or call 1-866-903-9594                    rates.
to check your points balance, review rewards options,          • Private student loans to fill the gap when savings,
and place an order. Representatives can assist you 24            federal loans, and scholarships are not enough.
hours a day, 7 days a week.                                             Check your statement for details.
If you are not a cardholder, call us at 1-877-578-2710
to request an application or apply by phone.



                                                         3
Invest for the Long-Term:
Stick with the Plan
One of the realities of investing is that over short            management team oversees the fund’s investment
time periods financial markets can either please                strategy.
or disappoint investors. As evidenced since late                AFBA eagerly seeks to meet all your investment needs.
February of this year, the stock market is a somewhat
volatile entity that a number of factors can positively         You should consider the investment objectives,
or negatively impact. Most economists agree the                 risks, charges and expenses of the AFBA 5 Star
U.S. economy continues to show signs of strength;               Funds carefully before investing. A prospectus with
however, reports of weakness—real or perceived—can              this and other information may be obtained by
negatively impact market performance.                           calling 1-800-243-9865 or by visiting our website
                                                                at www.afbafunds.com. The prospectus should be
Investors should exercise caution at any point in a             read carefully before investing.
market cycle because financial markets are cyclical
in nature. Given this fact, markets do tend to return           Mutual Funds are distributed by PFPC Distributors,
favorable results over longer periods of time. The              Inc., Valley Forge, PA. Insurance and banking
key to successful long-term investing is formulating            products are offered by affiliates of AFBA.
a plan, understanding the risks associated with
that plan, and continuing to execute the plan
with modifications as needs change with life cycle
experiences.
Managing risk is an important component of any
investment portfolio. Asset allocation is a valuable tool
that aids investors in the long-term management of
market risks. The proper mix of available asset classes
including stocks, bonds, cash, and subsets of the same
is the foundation of any asset allocation. It is also a
major contributor to attractive risk adjusted returns.
AFBA 5Star Funds furnish a variety of investment
resources for AFBA members—including guidance
on asset allocation and mutual fund products. AFBA
5Star Funds have provided competitive returns
for investors since their inception in 1997. The
funds provide approaches to a variety of investment
objectives aimed at meeting investors’ needs. AFBA
members receive exclusive access to the funds with
“I” Shares—which are not currently available to the
public.
One consideration for many members is the AFBA
5Star Balanced Fund. This fund takes on the
responsibility for asset allocation. It generally owns a
mix of stocks, bonds, and cash and the allocation of
the fund will change over time. An expert portfolio




                                                            4
                              BOARD OF DIRECTORS’ BIOS

Ballot Cards and Board Bios
For AFBA life insurance members, please review the bios listed below and cast your vote on the enclosed ballot card.
Return the ballot in the enclosed envelope, or you may vote online at www.afba.com/ballot.htm.
Chairman
James L. Jones was the Supreme Allied Commander, Europe and Commander of the United States European Command,
before retiring on February 1st of this year. Previously, General Jones was the 32nd Commandant of the Marine Corps (July
1999 to January 2003). General Jones graduated from Georgetown University School of Foreign Service in 1966 with a
Bachelor of Science degree and he received an Honorary PhD in 2002. He was commissioned as a second lieutenant in the
Marine Corps in January 1967. General Jones currently serves as Chairman of the AFBA Board.

Vice Chairman
Billy J. Boles served as the Commander of the Air Education and Training Command, headquartered at Randolph Air Force
Base, Texas, before retiring from active duty in 1997. General Boles graduated with a Bachelor of Science in 1961 from North
Carolina State University. He was commissioned through the Reserve Officer Training Corps program and entered active duty
in March 1962. General Boles served over 35 years in the United States Air Force. Previously, he served as the Deputy Chief
of Staff for Personnel, HQ, USAF, Washington, D.C. General Boles currently serves as Vice Chairman of the AFBA Board of
Directors and Chairman of the Compensation and Personnel Committee.

John N. Abrams served as the Commanding General of the United States Army’s Training and Doctrine Command. He
retired from active duty in January 2003 after more than 36 years of service in the United States Army. General Abrams
previously served as Commanding General, V Corps, United States Army Europe and Seventh Army, Germany. He graduated
from Bowling Green University of Ohio with a Bachelor of Science in Business Administration and holds a Master of Science
in Public Administration from Shippensburg University. General Abrams enlisted in the U.S. Army in February 1966 as a tank
crewman. He was commissioned as a second lieutenant upon graduation from Officer Candidate School in 1967. General
Abrams currently serves as an AFBA Board member and is on the Planning Committee.

John B. Conaway served as Chief of the National Guard Bureau, Washington, D.C., before retiring in 1993. Previously he
served as Director of the Air National Guard from April 1981 to July 1988. General Conaway graduated from the University
of Evansville in 1956 with a Bachelor of Science in Business Administration and holds a master’s degree in Management
and Human Relations from Webster College. General Conaway entered the Reserve Officer Training Corps program while
attending the University of Evansville and was commissioned as a second lieutenant in the Air Force in 1956. Prior to joining
the AFBA Board of Directors, General Conaway served on the 5Star Life Insurance Company Board. He is currently an AFBA
Board member and the Chairman of the Planning Committee.

Leon A. Edney served as NATO’s Supreme Allied Commander, Atlantic and Commander in Chief, U.S. Atlantic Command
before retiring from active duty in 1992—after 35 years of service in the United States Navy. Previously Admiral Edney served
as Vice Chief of Naval Operations and directly reported to the Chief of Naval Operations. He was commissioned as an ensign
in 1957 following his graduation from the U.S. Naval Academy. He also holds a master’s degree in Public Administration
from Harvard University. Admiral Edney served as the AFBA Chairman of the Board from February 1991 to May 1992 and
currently serves as an AFBA Board member and is on the Compensation and Personnel Committee.

Larry R. Ellis served as Commanding General in the United States Army Forces Command, Fort McPherson, Georgia,
before retiring from active duty in 2004. He served over 35 years in the United States Army. General Ellis also served as the
Deputy Chief of Staff for Operations and Plans, USA, Washington, D.C. He attended Morgan State University earning a
Bachelor of Science in 1969 and a Master of Science from Indiana University in 1974. He was commissioned as a second
lieutenant through the Reserve Officer Training Corps Program. General Ellis currently serves as an AFBA Board member and
is on the Planning Committee.




                                                              5
                               BOARD OF DIRECTORS’ BIOS – Continued

Hal M. Hornburg served as Commander, Air Combat Command, Langley Air Force Base, Virginia, and Air Component
Commander for U.S. Joint Forces Command and U.S. Northern Command before retiring from active duty in 2005. He
served over 36 years in the United States Air Force. Previously General Hornburg was the Commander, Air Education and
Training Command, Randolph Air Force Base, Texas. He graduated with a Bachelor of Business Administration in Finance
from Texas A&M University in 1968 and holds a Master of Science in Human Resource Management from the University of
Utah. He was commissioned through the Reserve Officer Training Corps program and entered active duty in 1968. General
Hornburg currently serves as an AFBA Board member and is on the Audit Committee.

John M. Loh served as Commander, Air Combat Command, Langley Air Force Base, Virginia, before retiring from active
duty in 1995. He served over 35 years in the United States Air Force. He also commanded the Aeronautical Systems Division,
Air Force Systems Command and served as Air Force Vice Chief of Staff. General Loh is a command pilot with more than
4,300 flying hours, primarily in fighter aircraft, and flew 204 combat missions in Vietnam. General Loh earned a Bachelor of
Science in Engineering Science from the United States Air Force Academy in 1960 and a Master of Science in Aeronautical
Engineering from the Massachusetts Institute of Technology. He served as the AFBA Chairman of the Board from May 1992
to May 1995. Currently he serves as an AFBA Board member and is on the Compensation and Personnel Committee.

T. Joseph Lopez served as Commander-in-Chief of U.S. Naval Forces Europe and Commander-in-Chief Allied Forces,
Southern Europe before retiring from active duty in 1998. He served over 39 years in the United States Navy. He also
commanded the Peace Implementation Forces in Bosnia-Herzegovina from July 1996 to November 1996. Admiral Lopez
enlisted in the Navy in September 1959 and was commissioned as an ensign via the Seaman-to-Admiral Program in December
1964. He is one of two Flag Officers in the history of the U.S. Navy achieving four-star rank after direct commission from
enlisted service. Admiral Lopez currently serves as an AFBA Board member and is on the Audit Committee.

Thomas R. Morgan served as the Assistant Commandant of the United States Marine Corps from June 1986 until he retired
from active duty in July 1988. He served over 36 years. Previously he served as the Deputy Chief of Staff for Plans, Policies,
and Operations with additional duties as Acting Chief of Staff added in November 1985. General Morgan graduated from
Colgate University in Hamilton, New York, with a Bachelor of Arts in History and Political Science in 1952. He also holds
a Master of Arts in Counselor Education from the University of Virginia in Charlottesville, Virginia. General Morgan was
commissioned as a Marine second lieutenant in 1952. He currently serves as an AFBA Board member and is the Chairman of
the Audit Committee.

Gerald R. Murray served as Chief Master Sergeant of the United States Air Force, the 14th Chief Master Sergeant appointed
to the highest non-commissioned officer position. He retired from active duty in 2006. Previously he served as Command
Chief Master Sergeant, Pacific Air Forces, Hickam Air Force Base, Hawaii. Chief Murray is a distinguished graduate of the
Senior Non-commissioned Officer Academy, Gunter Air Force Base, Alabama. He currently serves as an AFBA Board member
and is on the Planning Committee.

Leon E. Salomon served as the Commanding General, U.S. Army Materiel Command, Alexandria, Virginia, before retiring
from active duty in March 1996. He served over 37 years in the United States Army. General Salomon’s previous assignments
included Deputy Chief of Staff for Logistics, Department of the Army, and Deputy Commanding General for Combined
Arms Support. General Salomon holds a Bachelor of Science in Chemistry and Biology from the University of Florida, as
well as a Master of Science in Management Logistics from the U.S. Air Force Institute of Technology. On completion of
Infantry Officer Candidate School he was commissioned as a second lieutenant in 1959. General Salomon served as the AFBA
Chairman of the Board from May 1995 to March 1996. He is currently an AFBA Board member and is on the Compensation
and Personnel Committee.

Patricia A. Tracey served as the Director, Navy Staff before retiring from active duty in 2005. She served over 35 years in
the United States Navy. Admiral Tracey’s previous assignments included Chief of Naval Education and Training and Director
of Naval Training. She graduated from the College of New Rochelle with a Bachelor of Arts in Mathematics and earned a
master’s degree in Operations Research from the Naval Postgraduate School in Monterey, California. Admiral Tracey completed
Women Officers School and was commissioned as an ensign in 1970. She was the first woman in the U.S. Navy to achieve the
rank of Vice Admiral. Admiral Tracey is currently an AFBA Board member and is on the Audit Committee.



                                                               6
                                 MEMBER INFORMATION

60th Anniversary                                             those contained in an insured’s will or trust or other
Annual Members’ Meeting                                      writing, shall govern in all cases. Upon divorce in AK,
                                                             AZ, CO, HI, MI, MN, MS, MT, NM, ND, OH,
We invite you to celebrate AFBA’s 60th Anniversary
                                                             OK, PA, SD, TX, UT, VA, WA, and WI, retention of
with us at the Annual Members’ Meeting. In honor of
                                                             a pre-divorce spouse beneficiary requires his or her re-
this event a dinner will be held on May 24th at 6:30
                                                             designation as a beneficiary and may not be binding
p.m. at the Army Navy Country Club in Arlington,
                                                             upon AFBA, or its underwriter, in the absence of
Virginia. If you wish to attend please call Lynn
                                                             prior notice and unless made in the above prescribed
McConnell with your entree selection of either beef,
                                                             manner.
chicken or fish, at 703-706-5940 or 1-800-776-2322
x5940 no later than Thursday, May 17, 2007.                  Group Decreasing Term Annual Refunds
Contact Us                                                   For Group Decreasing Term members, basic non-
                                                             tobacco users will receive a cash refund of $5.00 for
Log onto our website to see what is new at AFBA and
                                                             every month they were on active duty status between
our related enterprises. For up-to-date life insurance
                                                             1 February 2006 and 31 January 2007. If you have
account information have your AFBA number or SSN
                                                             supplemental and lock-in options, you will also
ready. AFBA makes it easy to change your address,
                                                             receive a $2.00 monthly refund for each supplemental
apply for life insurance, download a mutual fund
                                                             unit as long as you are active duty and a non-tobacco
prospectus, or check your bank account. Our website,
                                                             user. Refund checks will be mailed in July.
www.afba.com, is available 24/7!
Call 1-800-776-2322 if you prefer to speak with an           2007 Financial Planning Guide
experienced customer service representative. They are        AFBA’s 2007 Financial Planning Guide (FPG) is
standing by ready to take your call!                         complimentary to all AFBA members and their
                                                             families. This valuable resource includes information
HOURS:
                                                             on:
Monday through Friday
8:00 a.m. to 5:30 p.m. Eastern Time
                                                               • The basic principles of financial planning
                                                               • Military pay, allowance, and retirement benefits
Address Changes                                                • Health benefits
The summer months are busy with families moving                  (including
to new duty stations. Please keep us informed of your            Tricare)
address. If you are planning a move you can change             • Social Security
your address online at www.afba.com or call one of               and survivor
our customer service representatives at                          benefits
1-800-776–2322. It is that simple!
                                                               • Veterans’
Changing Your Beneficiaries                                      benefits
This is a reminder that any insured who wishes to re-          • Federal civilian
designate a beneficiary should do so by using a 5Star            employee
Life Change of Beneficiary Form. You may download                benefits
this form at www.afba.com. Please print the form, fill         • Much, much
it out completely, sign, date, and mail (do not forget           more!
to initial beside the product for which you want to
                                                             You may request a copy of the 2007 FPG on the
change the beneficiary). You may also call
                                                             enclosed ballot form or by calling 1-800-776-2322.
1-800-776–2322 to request a form by phone.
                                                             The Guide may also be downloaded (in pdf form)
Please note that only the owner can change the               from our website at www.afba.com.
beneficiary. Beneficiary changes on these forms, not

                                                         7
                                       MEMBER BENEFITS

                                                               give serious consideration to its testing—particularly
NEW! Personal Financial Planning!
                                                               if you have a family history of stroke or if you are
AFBA is pleased to offer access to financial planning          overweight, a smoker, or have diabetes or high blood
as a new membership benefit! This new benefit is               pressure.
part of AFBA’s commitment to provide solutions
that satisfy our members’ life cycle needs. Financial          Focusing on preventive care is the best way to avoid
planning is a process for creating a road map for              disease, remain healthy, and protect your vitality.
individuals that considers a number of issues (e.g.,           AFBA Announces 2007 Member Travel
education funding, retirement planning, investment
                                                               Benefit!
effectiveness, and estate planning).
                                                               In partnership with Military Historical Tours, AFBA
Having completed extensive due diligence, AFBA                 members receive a five percent (5%) discount on
selected Lincoln Financial Advisors, a member of               an October 20th to 28th Seine River Boat Cruise.
the Lincoln Financial Group, a diversified financial           Join General Carl Fulford (USMC, Ret.) on a cruise
services organization whose parent company                     through the beautiful lights and streets of Paris, the
holds a 101-year legacy of honesty, integrity, and             majestic French countryside, the historic D-Day
responsibility. At AFBA, we believe LFA’s client-              beaches, and an optional trip to the legendary Belleau
centered “Serve First” philosophy fits well with our           Wood Battlefield. Call MHT at 1-800-722-9501 and
members—individuals who put service first when                 mention code 7195.
serving our country.
                                                               Every Member Get a Member!
A well-constructed financial plan will help you
meet your financial goals. Through its alliance with           Tell your friends and family about us. If they join, we
Lincoln, AFBA provides a complimentary initial                 will send you a special free gift—your choice of an
consultation and discounted planning services for our          AFBA hat or travel mug. Call us with the name and
members.                                                       address of everyone you believe would be interested
                                                               in AFBA’s products or its related enterprises. We will
Give the staff at AFBA a call at 1-800-661-2466                send them a CD which tells the “AFBA story” and
to discuss your financial planning needs or visit our          our offerings. Once they join, call us to confirm their
website at www.afba.com.                                       enrollment and we will send YOU your free gift of
NEW! Life Line Screening!                                      choice.
AFBA announces a new membership benefit available
through Life Line Screening, the nation’s largest
provider of preventive health care screenings. Life Line
Screening offers non-invasive ultrasound screenings
to identify the risk of stroke, vascular disease, and
osteoporosis. This program also screens for blocked
carotid arteries, abdominal aortic aneurysms, and
peripheral arterial disease.
Booking an appointment with Life Line Screening is
easy. Simply go online to www.LifeLineScreening.com
(source code: BDGA-018) or call 1-888-653-6190.
The cost of the screening to AFBA members is only
$120. Life Line recommends everyone over age 50




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