The Survivor Benefit Plan (SBP)
The Survivor Benefit Plan (SBP) is a government-backed, monthly income annuity provided to eligible beneficiaries when a servicemember dies. Military retirees receive a monthly pension for life that may be adjusted with the Cost of Living Adjustment (COLA). SBP offers a way to preserve part of that monthly income for an eligible beneficiary.
SBP Quick Facts
- Military retired pay stops upon the death of the servicemember; SBP allows for a part of that retired pay to continue to a survivor
- SBP provides a monthly annuity, increasing with the Cost of Living Adjustment (COLA) for your eligible beneficiaries; for a surviving spouse, that benefit may be for life
- Base amount: you may elect SBP based on your full gross retired pay or on a reduced base amount (from $300 to full retired pay), elected in dollars per month
- For spouse coverage, SBP cost is 6.5% of base amount
- Premiums are paid with pre-tax dollars
- Participation is paid up after completion of 30 years of payment AND attaining age 70
- Premium payments stop:
- When the retiree’s children are no longer eligible, which occurs on their 18th birthday (or age 22 if a student); however, a disabled child may be eligible for life
- If the retiree loses their spouse through death or divorce
- Upon death of the retiree
- If the retiree elects to disenroll during the 2nd and 3rd year into retirement (spouse concurrence required)
- SBP provides a monthly benefit, not a lump-sum payment
- Monthly benefit payments are 55% of the elected base amount and are protected against inflation with the COLA
SBP Eligibility and Enrollment
While on active duty, SBP is a free and automatic benefit. Participation is voluntary for retirees and pre-tax payments are generally made via deduction from retirement pay.
You are required to make an SBP election by your last day on active duty. Confirm with your administrative office when your paperwork should be submitted. The SBP election is made on form DD-2656 or CG4700 for USCG, National Oceanic and Atmospheric Administration, and USPHS. You may elect SBP based on your gross retired pay or a smaller base amount (from $300 to full retired pay).
Reserve Component SBP (RCSBP) is slightly different from SBP (see below).
SBP Election Options
If you elect SBP, you must designate your beneficiary at that time. Changing your SBP election in retirement is possible only under very limited circumstances. Review your assets, life insurance coverage, savings, and investments to ensure that your loved ones will have the financial resources they need to take care of themselves when you die. SBP can be a valuable option in providing for your loved ones.
You may make one election from the options below:
A Survivor Benefit Plan annuity will only be paid to the spouse and will stop at his/her death or if the spouse remarries before age 55
Cost is 6.5% of base amount
Benefit is 55% of base amount; monthly, COLA-increased, lifetime benefit
SBP spouse concurrence is required if any base amount less than full retired pay is elected and/or spouse coverage is not elected
SBP benefits are offset by any spouse Dependency and Indemnity Compensation (DIC); if DIC is greater than SBP, SBP is terminated
Spouse and Child
Allows for payment to be made first to the spouse and, in their absence, to children (via a guardian)
Children remain eligible beneficiaries until age 18 (or 22 if a student)
Cost is 6.5% of base amount for the spouse, plus an additional child cost
Child cost is based on age of retiree, age of spouse, age of youngest child, and base amount elected
When children are no longer eligible, child premiums stop
Child coverage cost is based on the ages of the retiree and the youngest child and the base amount chosen
Child premiums stop when children are no longer eligible
Disabled child may be eligible to receive SBP for life
For a disabled child, you may elect for the SBP beneficiary to be a Special Needs Trust; learn more from DFAS and the DoD
Choice may be required by a divorce decree; individuals who are under a court order to cover a former spouse cannot cover a current spouse
SBP may not be divided between a former and current spouse
Cost and benefit are the same for former spouse as for current spouse
Former Spouse and Child
Cost and benefits are the same as for spouse and child
Payments must be made to a person and the cost is different from the information above; those interested in this choice need to verify the eligibility rules and review the cost structure; more information is available at militarypay.defense.gov
Retiree must choose full base amount with this option
Premiums range from 10% to 40% of base amount, depending on age of retiree and age of beneficiary
If marital status changes in retirement, SBP beneficiary may be changed within one year of marriage
If you choose not to participate, you may not have another chance to enroll later; exceptions include:
An unmarried, divorced, or widow/widower retiree can elect SBP coverage for a new spouse; this coverage becomes effective one year after the marriage
Servicemembers without children at the time of retirement may elect coverage for children within one year after the birth or adoption
Changing or Ending Coverage
Once you make your SBP election, there are very few circumstances under which you may change it. A participation decision is revocable between the second and third year of receiving retirement/retainer pay with spouse concurrence. Find additional information here.
A recent study by the Rand Corporation, entitled “An Assessment of the Military Survivor Benefit Plan,” responds to Congress’s request for evaluation of the program’s efficacy and the potential to commercialize the Survivor Benefit Plan (SBP).
Understanding Your Options
Navy Mutual Aid Association has been recognized by the Department of Defense as a resource for counseling and information on the Survivor Benefit Plan. If you need help making your decision – or want to compare your options – contact our Education team to get the expert guidance and assistance you need.
Reserve Component Survivor Benefit Plan (RCSBP)
The Reserve Component Survivor Benefit Plan (RCSBP) is like SBP, with a few significant differences. Due to the unique nature of reserve service, there are a few differences in eligibility, options, and cost. Like SBP, it provides an inflation-protected annuity for your spouse or other eligible beneficiary.
You should receive a package when you become retirement eligible that will require you to make a decision about RCSBP. If you do not make an election within 90 days, you will automatically be enrolled in Option C using your full retired pay as the base amount (details below).
Option A: Decline participation; you will have another opportunity to elect RCSBP when you begin to draw retired pay
Option B: Deferred annuity; your beneficiary will receive annuity payments beginning on the anniversary of your 60th birthday
Option C: Immediate annuity; your beneficiary will receive annuity payments immediately after your death
RCSBP Cost and Benefit
Coverage cost is made up of the SBP cost and the RCSBP add-on cost
The SBP cost is based on the retiree’s base amount and beneficiary elected; e.g. for spouse/former spouse coverage, the SBP cost is 6.5% of the base amount
The Reserve Component add-on cost is based on your monthly retired pay, as well as your age and the age(s) of your annuitant(s) at the time you make the election; refer to the Office of the Department of Defense Actuary tools to calculate RCSBP premiums
If you elect Option A and then elect to participate at age 60, your retired pay will be reduced by the SBP cost; the benefit is 55% of the base amount
If you elect Option B, when you begin collecting retired pay, it will be reduced by the SBP cost
If you elect Option C, when you begin collecting retired pay, it will be reduced by the SBP cost and the RCSBP add-on cost
If you elect Option B or C and die before you reach age 60, your beneficiary will receive annuity payments based on the base amount you elected minus the RCSBP cost; Spouse Only and Spouse and Child options cost the same prior to age 60
Navy Mutual Aid Association’s Department of Education and Veteran Services does not endorse or favor any commercial financial product or service or promote the services of any specific financial institution. Further, Navy Mutual Aid Association and its accredited VSO Representatives do not charge or accept a fee or gratuity for representation services rendered to claimants before the Department of Veterans Affairs. 38 C.F.R. §14.628.