INSIGHT: Help Protect Your Loved Ones by Understanding Your Survivor Benefit Plan



Updated March 9, 2017


As my husband approaches military retirement and we plan for the transition, one of the items on our checklist is to consider whether we will elect the automatic full-coverage Survivor Benefit Plan (SBP). September is also Life Insurance Awareness Month, so this is a great time to share what I have learned about SBP, a plan that pays a surviving spouse to help cover the loss of the veteran’s retirement income.



SBP is protection against a provider’s untimely death — just like life insurance. However, life insurance is more expensive to purchase if you’re older or have health problems. SBP benefits don’t factor in your age or health, and they’re adjusted for inflation.


At retirement, full basic SBP for a spouse and children will take effect automatically unless you choose to reduce or decline coverage. You can’t reduce or decline spouse coverage without your spouse's written consent.


Participation in SBP requires a monthly premium — 6.5% of your elected base amount. You can choose a base amount anywhere from full monthly retirement pay to a minimum of $300. The annuity benefit will be 55% of the base amount. Say your retirement pay is $4,000 a month. That means your premium for SBP is $260 a month. The annuity benefit would be $2,200.


Answering these questions can help determine whether SBP is right for your family:


  1. How much income do your loved ones need after you die?
  • Look into working with a CERTIFIED FINANCIAL PLANNER™ for a survivorship planning review to determine those needs.
  • Consider the age and health of both spouses. Which one might outlive the other?
  • Weigh other special circumstances. For example, you may want SBP with child coverage if you have financially dependent children.


  1. What resources do your loved ones have to replace your income or pension?
  • Consider the savings, insurance death benefits and income your spouse would have available after your death.
  • Factor in any income your spouse and family members would receive. If your spouse’s income is sufficient to meet all the family’s financial goals without replacing your income, SBP may not provide as much benefit.


  1. Are the financial needs of your loved ones greater than the resources available after your death?
  • In many cases, SBP alone may not provide enough income for your surviving family. In this case, consider supplementing SBP with life insurance.
  • SBP offers permanent protection, so term insurance usually isn’t an adequate replacement.


While evaluating your situation, also keep these items in mind as you make the decision about SBP:


  • SBP is subsidized by the U.S. government.
  • Cost-of-living adjustments ensure the benefit keeps pace with future inflation.
  • Premiums paid for the coverage are deducted before taxes.
  • The spouse can never outlive the benefit.

More resources


Use USAA’s Life Insurance Needs Calculator¹ to help decide how much coverage your family needs.


¹This calculator is a self help tool. You should enter figures that reflect your individual situation. This information is provided for illustrative purposes only. The above life insurance needs estimate is based in part on the age and information you entered and results may vary depending on your individual circumstances.


Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNER™ in the United States, which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.


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