Military Survivor Benefit Plan 101

Posted by Debi Teter

Military_Survivor-Benefit_PlanEnrollment in an annuity plan is a decision that requires careful consideration. If you are considering enrolling in an annuity plan, you should review the:

  • advantages and disadvantages
  • costs
  • beneficiaries eligible for coverage
  • limitations on leaving or changing coverage

Advantages and Disadvantages

Advantage: You will leave a guaranteed income to your beneficiary

Eligible beneficiaries under the plan will receive 55 percent of the retiree’s elected amount of coverage.

Advantage: SBP benefits are inflation indexed, and coverage and cost are not affected by illness or age

Unlike many private life insurance policies, SBP coverage will not be cancelled or revoked due to any illness you may have or your age. Whether you retire at age 45 or 80, you or your spouse’s age or health will never be considered a liability and never impact the cost of the program. In addition, the receipt of survivor benefits will not be affected by Social Security benefits. Finally, the SBP annuity is protected against inflation, increasing each December with a Cost of Living Adjustment based on the Consumer Price Index.

Advantage: You can pay for SBP benefits with a pre-tax payroll deduction

For nearly all retirees, Survivor Benefit Plan premiums are automatically deducted from your gross pay prior to the deduction of federal income tax. This decreases your total taxable income.

Disadvantage: Cost

SBP coverage is supplied at no cost while you are in active service. During your retirement, however, a monthly deduction is taken from your pay to pay for your SBP coverage. This can be as much as, but no more than, 6.5 percent of your gross retired pay.

You might consider the relationship between the cost of the program and its benefits. To earn an even return on your investment, your beneficiary typically must receive payment for seven months for every five years you pay SBP premiums.

Disadvantage: Once you enroll, changing your election is difficult

Although it may seem unnecessary to consider providing for your loved ones until later on in life, please be aware that the decisions you make at retirement regarding your SBP can be difficult to change. For example, if, at retirement, you have an eligible spouse or children and decide not to have them covered under the plan, it will be very difficult to have your current or any future spouse or children covered under the plan in the future.


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5 responses to “Military Survivor Benefit Plan 101”


    I was under the belief that SBP would be paid until the spouse was divorced or died and did not know that after 7 months for every 5 years of paying SBP premiums. I sure was not briefed on that and do not think it Is as good of a deal any longer. Can I cancel and get my money back and get another plan civilian wise that pays until my wife died. Would you explain how long my wife would get it as I started paying in 1991???

    • Sharon Loschen says:

      My husband, when he retired from the Marine Corps, took out SBP and griped about the cost. Every so ofyen, he said what we could be doing with the money we would be saving. David, he died right in front of me of his first and only heart attack on 9/14.2007, and I get half of his retirment money for the rest of my life. It pays the mrtgage and in 2006, I was in an accident that left me totally disabled. Keep the SBP, for your wife’s peace of mind–it is worth it. And the COLA raises keep it a good bargain!!!

  2. Roger Parker says:

    If my wife dies while I am receiving retired pay, will my full retirement pay be restored?

  3. M.N. Sifford says:

    Hope this provides an answer for you:

    Section A—Fundamentals of the Survivor Benefit Plan (SBP)
    1. General Plan Information. Military pay stops when a member dies. The SBP is a
    Government program which makes it possible for retiring members to ensure that after their
    death, their eligible survivors receive a portion of their military retired pay in the form of a
    monthly annuity. The Plan was structured so that a surviving spouse cannot outlive the annuity
    and it has Cost-of-Living Adjustments (COLAs) incorporated so the annuity increases with


    I served 45 years in serving the United States and now am getting messed over by the United States. I served 25 years in the military and 20 years in civil service. I have ran into 2 very bad situations I do not think is right. After serving and paying Social Security over those 45 years the Social Security rules say unless my wife is a United States Citizen she cannot claim from my Social Security. I think I earned it and my wife should be able to claim it when she turns 65.There are others that have not served and wives have not worked at all and are allowed to draw on their husbands Social Security. Would you please help me with this?

    My second request I am requesting help with is my wife will be able to claim the military SBP but the draw back is Social Security will take out 30% tax on it. I think that is a big exuberant, don’t you.