Download Survivor benefit plan

SURVIVOR BENEFIT PLAN
Kate Horrell
financial educator
KateHorrell.com
WHAT
IS
SBP?
• Income continuation plan
for dependents of
deceased active duty and
retired servicemembers.
• Two parts: active duty
and retiree
• Lots of details and some
choices
RETIREMENT
• Choice made at
retirement
• Choice made by spouse
• Assume it is irrevocable*
• VERY IMPORTANT
CONS
• Cost, as much as 6.5% of
retired income
• Irrevocable decision
• Income is taxable*
PROS
•
•
•
•
Lifetime income*
Cost of living adjustments
Low cost coverage
Cannot be cancelled or
modified due to age or illness
• Not impacted by Social Security
• Premiums paid pre-tax*
• Premiums end when aged 70
and have paid for 30 years
COST
• Cost is 6.5% of covered amount
• Covered amount may be full
amount of retirement pay, or a
portion thereof
BENEFIT
• Survivor benefits are paid as
annuity
• 55% of covered amount
• Cost of living adjusted
• Taxable income
• May be offset by DIC or VA
benefits
ELIGIBLE
BENEFICIARIES
•
•
•
•
•
Spouse
Spouse and children
Children only
Former spouse
Natural interest
person*
CRAZY
AND
COMPLICATED
STUFF
• SBP benefits are
reduced, dollar for
dollar, by the amount of
DIC benefits
•
HOW
TO
DECIDE?
• Overall financial situation
• Health and age of spouses
• Likelihood of receiving DIC
ACTIVE
DUTY
SBP
COVERAGE
• Automatic
• No cost
• Full coverage (100% of
pay equals 55%
replacement income)
• Offset by DIC
RESOURCES
• http://www.dfas.mil/retiredmilitary/provide/sbp.html
• www.katehorrell.com
• http://militarypay.defense.gov/survivor/sbp/01_overview.html