Survivor Benefit Plan

SBP (Survivor Benefit Plan) (The entire truth, not just the

government half of the story)

Ø SBP is a tremendous benefit to many service members. 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).

Ø If your spouse elects 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."

Ø A surviving spouse's SBP annuity is reduced when they reach age 62 and become eligible for Social Security. This is called the Social Security offset. In the past the offset reduced the SBP annuity to 35 percent of the base amount. The offset created a need for members to purchase a Supplemental Survivor Benefit Plan (SSBP) policy. Fortunately the National Defense Authorization Act of 2005 established a phase out of the offset by 2008. Thus eliminating the need for the SBP.

The phase out will increase the SBP percentage as follows:

Ø 40 percent in October 2005

Ø 45 percent in April 2006

Ø 50 percent in April 2007

Ø 55 percent in April 2008

But, the rules are a bit expensive since you cannot quit or stop your SBP unless the retiree or spouse dies. So, you love your spouse and spend 30 years making SBP payments and sadly, she dies… how much did it cost you? That money is gone forever. Or, if you have SBP and you get divorced, that money is gone forever, too. Do the math.

Retirement Pay Monthly	SBP .065 % Payment Monthly	SBP Payment Annually	Number of years in Retirement	Cost of SBP
$ 3,000	$ 195	$ 2,340	30	$ 70,200
$ 1,700	$ 110.50	$ 1,326	20	$ 26,520

Ø When is it a good deal?

Ø Where should I go to get a better deal?

Ø Did you realize the SBP is a plan your spouse has to sign away rights to?

Ø How much will it cost me and I live 30 more years?

Ø What happens if I pay for SBP for 30 years and my spouse dies before me?

Ø What happens to SBP if I die and my spouse remarries years later?

Web Design By: J & J Technology Solutions