Survivor
Benefit Plan (SBP)
Definitions | Benefit
Payments | Cost Formula
Great
peace of mind comes with the lifetime, inflation-adjusted
monthly retired paycheck. But, retired pay stops when the retired
member dies!
SBP gives the survivors some of the same peace of mind. It
helps make up for the loss of part of the income. Also, it
offers a member of the uniformed services a method of providing
income after the member's death to:
-
Spouse
Dependent
children
-
Spouse
and dependent children
-
Former
spouse
-
Former
spouse and children
-
Person
with insurable
interest
Definitions
-
Spouse.
Surviving spouse who was married to a retiree at the time
of his or her retirement; or if not married at the time of
retirement, was married to the deceased retiree for at least
a year prior to his or her death; or if not married at the
time of retirement and not married for at least a year, was
the parent of a child of that union.
-
Child.
The unmarried adopted, step, foster or natural child
(of the current or a prior union) who is: under age 18
(or under age 22 if a full-time student). A child physically
or mentally incapacitated while in either category remains
eligible for SBP payments for life or until marriage.
-
Former
spouse. A former spouse who was not a member's
former spouse on the date a member became eligible
to participate in SBP must have been married to the
member for at least one year in order to be named
as an SBP former spouse beneficiary. (In other words,
a former spouse acquired after retirement must have
been an eligible spouse beneficiary.)
-
Insurable
interest. Persons with a bona fide financial
interest in the continued life of the retiree. This
is not available if the sponsor has a spouse or minor
child.
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Benefit Payments
The amount to be
paid to your spouse or child(ren) is 55% of the base amount
that you elect at retirement. The base amount can be anything
from your full retirement pay down to a minimum of $300 (or your
total retirement pay if less than $300).
Benefits paid to a spouse are suspended upon a remarriage before
age 55. These will be resumed upon application to DFAS if the
remarriage ends through death, divorce or annulment. If the
spouse remarries before age 55 and there are eligible children,
they will receive the SBP annuity payments until they are no
longer eligible. If the spouse remarries after age 55, benefit
payments are not affected.
Benefits paid to a spouse are reduced when that person attains
age 62. The surviving spouse may then begin the spousal Social
Security benefits. The combined annuities of SBP and Social
Security should never be less than 55% of the base amount selected
by the sponsor.
Under the Insurable Interest option (only available if there
is no eligible spouse or child), you must use your total retirement
pay as the base amount. The benefit payable is 55% of the adjusted
base amount after the cost is deducted.
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Cost Formula
Effective
1 March 1990, the costing formula for SBP is 6.5% times any selected
base amount.
Spouse Only Election.
The initial cost is 6.5% of the base amount you elect. (Ages are
not a factor). Example: base amount of $2000; 6.5 % x $2000 =
$130 before taxes. Provides a monthly annuity of $1100 ($2000
x 55%) until age 62; and $700 ($2000 x 35%) thereafter.
Spouse and Child(ren)
Election. Your age and the ages of your spouse
and youngest child at the time of retirement are factors. Inclusion
of your children into the SBP is a modest expense which ends when
the youngest is no longer an eligible beneficiary. Example:
the sponsor is 44, the spouse is 41, the youngest child is 12
and the initial cost is 6.5% of the base amount you elect; base
amount of $2000.00; 6.5 % x $2000 = $130.00 plus a family factor
of .00037 x $2000 =$ .74 (Total cost is $130.74 before taxes.)
Child(ren) Only
Election.
The age of the youngest child determines the cost factor. Example:
The youngest child is 12, the retiree is 42; base amount of $2000.00;
cost for Child Only is $2000 x 0.0044 = $8.80.
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