The Survivor Benefit Plan Explained

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When a military retiree dies their retirement pay stops. This means that the surviving spouse will be left without a substantial income source. If you are a retiree you need to give serious thought to how you can protect your spouse from the hardships caused by the loss of your retirement pay.

One option available to you is the Survivor Benefit Plan. The SBP is an insurance plan that will pay your surviving spouse a monthly payment (annuity) to help make up for the loss of your retirement income. The plan is designed to protect your survivors against the risks of:

  • Your early death;
  • Your survivor outliving the benefits; and
  • Inflation.

How SBP Works

At retirement, full basic SBP for spouse and children will take effect automatically if you make no other valid election. You may not reduce or decline spouse coverage without your spouse's written consent. This means you will have to have your spouses input in the decision and his or her signature is required. You may choose coverage for a former spouse or, if you have no spouse or children, you may be able to cover an "insurable interest" (such as, a business partner or parent).

NOTE: Survivors should report retiree deaths to the DFAS casualty office at 800-321-1080. Faxes can be sent to the office at 800-469-6559.

If you elect to participate in the SBP you will be required to pay a monthly premium. SBP Premiums and benefits are based on the "base amount" or benefit level that you elect. Your base amount can be any amount from full coverage down to as little as $300 a month. Full coverage is based on your full retired pay meaning your spouse will receive 55 percent of your retirement pay. If you select lesser coverage then your spouse will receive 55 percent of your elected "base amount."

Survivor Benefit Plan Coverage Available

There are several categories of beneficiaries that a member may choose from to provide an annuity under SBP. The categories are:

Spouse Only

Eligibility for this category requires that a surviving spouse be a widow or widower who was married to a retiree at the time of his or her enrollment; or, if not married at the time of enrollment, was married to the deceased retiree for at least one year prior to the retiree's death; or, if not married at time of enrollment and was not married to the deceased retiree for at least one year prior to death, was the parent of issue by that marriage. Spouse coverage applies not only to the spouse a member has at time of enrollment, but also automatically to any subsequent spouse the member might acquire, unless the member elects to decline coverage for a subsequent spouse within one year of the date of marriage (concurrence of the subsequent spouse is not required, but that spouse will be notified of the member's declination).

Spouse (or Former Spouse) and Child

SBP protection under this category is expanded to cover an eligible child or children if there is no surviving spouse, or if a surviving spouse subsequently dies or becomes ineligible to receive benefits due to remarriage before the age of 55. Thus, if there is a divorce or if the spouse dies before the retiree, the full SBP annuity will be paid to the eligible surviving child or children in the same manner as if the member had elected 'Child Only' coverage.

Child Only

This option provides an annuity only for dependent children regardless of whether a member is married or not at time of enrollment (although a married member's spouse must concur with a child only election). Children remain beneficiaries until age 18 or age 22 if a full-time, unmarried student. Children mentally or physically incapable of self-support remain eligible, while unmarried, for as long as the incapacitation exists. A member with no dependent children at time of eligibility to elect coverage may elect coverage for a child subsequently acquired, but the child must be added within one year of being acquired (born, adopted, etc.).

Disabled Dependent

A new law allows servicemembers or retirees to contribute their SBP payments to a Special Needs Trust (SNT) to allow the dependent to continue receiving federal disability payments.

A SNT is a trust designated for beneficiaries who are disabled, either physically or mentally. It is written so the beneficiary can enjoy the use of property that is held in the trust for his or her benefit, while at the same time allowing the beneficiary to receive essential needs-based government benefits.

Under the new law, the SNT would receive any SBP annuity payments that would otherwise be payable to or on behalf of the disabled dependent child.  This irrevocable decision may be made during the life of the member through a written statement that designates future SBP payments to the SNT

Former Spouse

A member who has a former spouse upon becoming eligible to elect a survivor annuity may elect coverage for a former spouse. If the member has more than one former spouse, the member must specify which former spouse is being covered. An election for a former spouse prevents payment of an annuity to a current spouse. A former spouse who was not a member's former spouse on the date a member became eligible to participate in SBP must have been married to the member for at least one year in order to be named as a former spouse beneficiary.

Person with a Natural Insurable Interest

A member who does not have a spouse or dependent child when eligible to make a program election may elect to provide coverage for a person with a natura insurable interest in the member. The Department of Defense defines a natural insurable interest as "a natural person with an insurable interest who has a reasonable and lawful expectation of financial benefit from the continued life of the participating member, or any individual having a reasonable and lawful basis, founded upon the relation of parties to each other, either financial or of blood or affinity, to expect some benefit or advantage from the continuance of the life of the retired member." If the election is for a person who is more nearly related than a cousin, no proof of financial expectation is required.

An election for insurable interest coverage, for other than a dependent (as described in 10 U.S.C. 1072(2)), made by a member retiring on or after November 24, 2003 under a military disability provision, who dies within one year after being retired due to a cause related to the disability for which retired, shall be voided and any premiums paid for that coverage will be paid to the person to whom the annuity would have been paid.

Inflation Protection

Like your retirement pay the SBP annuity is protected from inflation. Each year when retired pay gets a Cost-of-Living Adjustment - adjustments for inflation, known as 'COLA' -, so does the base amount, and as a result, so do premiums and annuity payments. Meaning that your premiums and annuity payments will increase with the COLA. These increases are determined by the previous year's Consumer Price Index and averages approximately 2.5 percent.

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Survivor Benefits