Survivor Benefits Plan: How does it compare to insurance?

MALMSTROM AIR FORCE BASE, Mont. --

The Survivor Benefits Plan (SBP) was developed to meet the family's needs for continuous income protection following a retired member's death. SBP is a non-profit annuity program which the government administers. Coverage is free while the member remains on active duty. After retirement, monthly premiums are held in the Retirement System Trust Fund, and benefits are paid to eligible survivors from that fund. The monthly premium (cost) for spouse coverage is not based on a member's health or age. DFAS automatically deducts monthly premiums, and deducted premiums are pre-tax dollars. SBP is subsidized as the Federal government absorbs approximately 40% of the plan's cost, and the monthly SBP annuity is increased by cost-of-living adjustments (COLAs).   

Think of Survivor Benefits as retirement protection. It pays a benefit when the insured person's retirement pay stops. SBP won't make a single lump-sum payment like insurance. Instead, SBP will pay up to 55% (with annual inflation adjustments) of the military member's retirement pay to a spouse or dependent children every month.

The member pays 6.5% of their retirement pay for a spouse only, a few cents to a few dollars more when selecting spouse and children, and on average, it is less than $10 for the child option per month. The member's retired pay (for those who elect to participate) is automatically reduced by a monthly premium, alleviating the need to write a check or establish an allotment.

Payments are made for minimal 360 months AND until the retiree reaches 70 years of age. However, if a member passes away before meeting the 360 payments or before reaching 70 years of age, it doesn't matter, the premiums will stop, and the benefit begins one day after the retiree's death.

On the other hand, insurance premiums are based on the age and health of the insured person. Many insurance policies terminate when the insured reaches a predetermined age (e.g., 65, 70). Insurance premiums are paid using money that has already been taxed. Insured must take measures, so premiums are paid and kept up-to-date (e.g., write a check or establish an allotment). Policies are subject to cancellation due to the non-receipt of premiums. Finally, the value of insurance proceeds may be significantly reduced because of inflation, and the value may be further diminished if the policy is reduced at a certain age (e.g., 65, 70).

All active-duty members with approved retirements will attend a required face-to-face SBP briefing before their final out. Your spouse is also highly recommended to attend this briefing because the information received is necessary after you are no longer living.  

Take advantage of it!  Additional details are available by calling Malmstrom's SBP Counselor Victoria Plank at 731-2911