The Survivor Benefit Plan (SBP) is a monthly benefit paid to the designated beneficiary of a retired servicemember who has passed away. Retired pay stops with the death of the servicemember, therefore SBP is one way to ensure a continued financial benefit for a servicemember's survivor.
SBP Election Options
Servicemembers have the option of enrolling in SBP when they retire.
There are six eligible beneficiary categories:
An eligible spouse is the spouse you’re married to when you die. If you
marry after retirement, the marriage must last at least one year or you
must have had children born of that spouse. Benefits are paid until the
spouse dies, but stop upon the spouse’s remarriage before age 55 (but
can be resumed if the remarriage ends).
Spouse & Child(ren).
The spouse is the primary beneficiary, with eligible children (to age
18, or 22 if full-time, unmarried college students) receiving the
annuity only if the spouse dies or remarries before age 55. The 55%
annuity is divided equally among the eligible children.
Eligible children are the primary beneficiaries. If the retiree dies
while a child is eligible, the 55% annuity continues until the child
exceeds the age of eligibility. "Eligible children" are defined as
adopted children, stepchildren, foster children and recognized natural
children who live with the retiree in a regular parent-child
relationship. Children of all marriages are eligible beneficiaries under
this election. Child coverage offers excellent protection for
incapacitated children, since the 55% annuity is payable to them for
life. The mental or physical incapacity must have been incurred while in
the age eligibility range.
This option can be elected voluntarily or be required by a state court.
Former spouse costs and benefits are identical to those for spouses.
The same remarriage limitations apply. If
a Former Spouse beneficiary dies prior to the Service retiree, the SBP Spouse
beneficiary reverts back to the Service member.
Former Spouse & Child(ren).
This is identical to the “spouse & children” option in costs and
benefits, except that only children of the marriage to the former spouse
are eligible beneficiaries.
If a retiree is unmarried with no children, this option may be
selected. The “natural person” must be someone with a financial interest
in your life. Examples are a close relative or a business partner.
Note: This option may be cancelled at any time. Should you gain a spouse
or child in the future, the insurable interest coverage may be changed
to spouse or child or both, within one year of acquisition.
Servicemembers must choose a base amount for the annuity. The annuity benefit will be 55% of the base amount. The base amount can be anywhere from the full monthly retirement pay to a minimum of $300.
If a servicemember has an eligible beneficiary at the time of retirement and chooses not to enroll in SBP, he or she cannot enroll in SBP unless during an open season authorized by Congress- these open seasons are rare.
Also, if a
servicemember is married at the time of retirement and elects not to cover
his/her spouse or chooses a reduced benefit,
then the servicemember must get spousal concurrence to deny coverage or reduce the survivor benefit. In addition, and
they are prevented from ever covering a new child or spouse or increasing the benefit amount.
The cost for spouse-only SBP coverage is 6.5% of your base amount. The premiums will be automatically deducted by DFAS from your monthly retirement check.
There are additional costs for children. You can use the formula from the Office of the Actuary to determine real costs.
Premiums are tax-deductible and subsidized by the federal government.
Once a retiree has made 360 payments (30 years) and reached age 70, he/she is considered paid-up, and no longer has to make payments.
When the servicemember passes away, the next of kin needs to notify DFAS to get the annuity started. It usually takes about 3-4 months after DFAS is notified for the SBP payments to being. They will be retroactive to date of death.
The annuity is 55% of the base amount, therefore if the base amount was $1,000, the annuity will be $550 per month. SBP is taxable.
Receiving Social Security and/or a civil service/FERS annuity will not interfere with SBP, unless the servicemember waived a portion of his retired pay for a combined civil service annuity.
However, if the survivor receives Dependency and Indemnity Compensation (DIC) from the VA, there is currently a dollar-for-dollar offset between SBP and DIC. In other words, if you receive DIC, you have to subtract the full amount
of DIC from your SBP payment. Because DIC is a tax-free payment and SBP
is taxed, DIC tends to be a better benefit. Survivors who are denied
SBP payments due to DIC are refunded the premium payments made by the
military member. Survivors who are subject to the offset also receive Special Survival Indemnity allowance which is an additional benefit meant to partially make up for the compensation lost due to the offset.
Needs Trust. If your SBP beneficiary is your disabled, incapacitated child, you
may have the annuity paid to a Special Needs Trust for the benefit of the
SBP Election Changes
SBP coverage can only be terminated during the 2nd year after retirement. Once this window has closed, servicemembers cannot dis-enroll from SBP.
If the selected beneficiary passes away, the servicemember must alert DFAS in order to stop the premiums. No premiums will be refunded, and the servicemember's participation is suspended, pending the gain of another eligible beneficiary.
In the event of a divorce, the servicemember may also suspend SBP coverage, as long as Former Spouse coverage is not mandated in the divorce decree. The servicemember will need to contact DFAS within one year of the divorce.
If the servicemember remarries following their first spouse's death or divorce (assuming there is no Former Spouse coverage), the servicemember has three options to cover their new spouse:
- Resume identical coverage they had
initially; cannot decrease level of coverage
- Increase level of coverage if they were
not at maximum level initially
- Elect not to resume coverage. This
decision is irrevocable and must be declared to DFAS within one year of the
remarriage or the initial level of coverage obtained by member will resume
If the servicemember has a total and permanent service-connected disability, then the retiree can withdrawal from SBP with the consent of their spouse because the spouse would receive DIC and be subject to the SBP-DIC offset. This irrevocable and the premiums are not refunded.