Survivor Benefit Plan or as we ex-military people would say SBP is basically an annuity for your spouse and kicks in when you, the primary military person dies. If you die on active duty it kicks in automatically for your spouse. But if you are retired like me you have to pay for it. It cost about $320 a month.
You pay for it for 360 months and then you are paid up and no longer have to pay for it. The annuity pays your spouse half of what you got in retirement. So it is different amount for different grades, the higher grades pay more than the lower grades. It is not a case of rank has its privileges. You have the privilege of paying more. I reached 30 years last September.
How much is it? Well is supposed to pay your spouse 50% of your retirement pay. And it runs as long as your spouse lives. I guess they figured since one of the pair is deceased the remaining spouse only needs half of the retirement. That is not perfect but it works for us. And of course it is taxed.
But since I am retired and a veteran I also get veteran's benefits. Should I die from an established disability ala VA, then my spouse collects Dependency Indemnity Compensation (DIC). And since I am now rated 100% disabled the VA considers virtually considers any cause of death as acceptable for DIC. Thus up until now you could not get a 100% of DIC and 100% of our SBP. For every dollar of your DIC you collected a dollar was substracted from your SBP. The law is changing, it has already been enacted. So basically by 1 February 2023 you can collect both of them. It is important to remember one pays for SBP out of ones retirement pay, while DIC is compensation and it cost the veteran nothing.
So it is refreshing to learn you still have the SBP and life a life insurance policy is "Paid Up." In the past if you withdrew from SBP you could not get it back. Those whose spouse precedes them into the grave, you can quit paying for it. You got nothing back, it was money spent for the protection and gone. You can voluntarily get out of paying it only if your spouse agrees since it is a benefit for the spouse not you. Divorce of course, all bets are off too. Now days I still have the protection for Judie but no longer have to pay for it.
When I signed up for SBP I asked my insurance company, USAA, was it a good deal. The answer was a resounding yes. That is I could not get such coverage for that amount of money from any insurance company. And the fee was deducted from my retirement pay before taxes. Nobody else except us military types could get this deal.
So should I die before Judie, she gets a good deal. In the old days we referred to this as the military "Widow's Tax." Congress has finally removed, albeit not immediately, the tax.
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That’s a great deal for your wife. However, not so great for divorced retirees. IMO, any former spouse who seeks a court order to force a member to opt for former spouse SBP coverage & is awarded said order: the former spouse should not only have to pay the full SBP premium (in the form of a reduced amount of retirement pay percentage award), he/she should also be awarded a smaller percentage of a member’s retirement pay. No member should have to pay a dime for former spouse SBP coverage or any separate and/or additional life insurance coverage. Doing so, only extends the former spouse meal ticket upon which the former spouse is banking.
Life insurance for minor dependents until they turn 18 is one thing. If life insurance is stipulated, then the children should be named as the sole beneficiaries or there should be strict parameters surrounding how monies from a life insurance payout can be spent including, stipulating that any monies spent must be substantiated with proof it was for a child-related expense.
Too many members are getting totally screwed because of the antiquated and outdated USFSPA. It’s been 40 years since the USFSPA was enacted by Congress. It’s time for a major overhaul of the archaic Act. Members need to prop text what they’ve earned.
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