Survivor Benefit Plan: Everything Military Members Need to Know
Death can be an uncomfortable subject, and yet it’s an inevitability for all of us. In many ways, it’s the only true guarantee that we all have in life. The Survivor Benefit Plan is there for military members who need it. There are plenty of dangers in the military and while service presents some uniquely harmful circumstances, it’s important to remember that sadly, there are many other more ordinary situations that can take friends and family from us as well. Making sure your loved ones are taken care of after you pass on is important and the Survivor Benefit Plan is a great way to ensure that they are. Of course, financial, legal, and similar decisions should be made by you and the appropriate professionals. MyBaseGuide can simply help guide you in solely informational purposes to discover the SBP benefits that could help your family.
What Is the Survivor Benefit Plan?
The Survivor Benefit Plan (SBP) provides benefits for when a member of the military dies on duty or after retirement for their spouse and/or children. Beneficiaries receive financial support through a monthly annuity. Annuitants are those who receive SBP annuities.
Your benefit amount will depend on the type of coverage chosen by the service member, which occurs when they retire or qualify after 20 years, in most cases. SBP benefits provide as much as 55% of the service member’s pay after they pass to the beneficiary.
The amount paid to beneficiaries by your SBP is adjusted for inflation and is increased just as the Cost-of-Living Adjustment (COLA) is throughout the years.
While the high premiums can be a considerable cost for many households, the benefits can still be a worthwhile investment for families. Here’s who qualifies as a beneficiary:
- Spouse Only – the spouse married to you at the time of enrollment. You can add a new spouse later, however, they must be married to you for at least a year before becoming eligible for benefits.
- Former Spouse – while you can only choose one former spouse, they can receive benefits if you choose them as your beneficiary. However, it should be noted that if you have a current spouse and elect a former, your current partner will not receive benefits.
- Spouse (or Former Spouse) and Child – by choosing this option, you’ll ensure that your spouse receives the benefits and if they pass before you do, your children will then receive payment once you pass.
- Child Only – provides benefits from your military Survivor Benefit Plan to your children regardless of marital status. Children are eligible for benefits until they are 18 years of age or 22 if they are single, full-time students. If your children are mentally or physically unable to support themselves, they are covered so long as this is the case provided they are single.
- Disabled Dependent – a Special Needs Trust (SNT) is available in which your SBP payments can be contributed to help disabled dependents receive federal disability payments.
- A Person With a Natural Insurable Interest – this is often used for business partners or other parties that have an interest in the service member outside of the realm of being a spouse or child. According to the U.S. Department of Defense, a natural insurable interest means “a natural person with an insurable interest who has a reasonable and lawful expectation of financial benefit from the continued life of the participating member, or any individual having a reasonable and lawful basis, founded upon the relation of parties to each other, either financial or of blood or affinity, to expect some benefit or advantage from the continuance of the life of the retired member.”
Again, before any elections or decisions are made, you’re going to want to speak to licensed financial and legal advisors before making any decisions.
Benefits for Fallen Reservists
The Reserve Component Survivor Benefit Plan (RCSBP) provides Reservists similar benefits in the event of a death. Beneficiaries receive an annuity which is a monthly payment that lasts their lifetime. The amount provided by the RCSBP depends on the amount of your retired pay and elections chosen.
These benefits are similar to the Survivor Benefit Plan but they are not the same. This means that the benefits you receive, the cost you pay, and your eligibility for the RCSBP are different than the SBP.
You are eligible for benefits if you are a part of the following:
- The Army National Guard of the United States
- The Army Reserve
- The Air National Guard of the United States
- The Air Force Reserve
- The Navy Reserve
- The Marine Corps Reserve
Is the Survivor Benefit Plan Worth It?
It all depends on your needs and the benefits your SBP provides can vary from person to person. For example, the Survivor Benefit Plan and VA Disability may conflict at times as you may withdraw from SBP to receive VA benefits.
The choice to receive benefits from your Survivor Benefit Plan can also depend on your household needs and budget in terms of the costs to obtain such benefits, and social security benefits can factor in as well. But overall, it’s a great option to consider and it can be there for your family after you pass as a bit of insurance against the loss of income.