Is the Survivor Benefit Plan Worth It?
The math, the alternatives, and how to decide
SBP provides up to 55% of your retired pay to your surviving spouse (or other beneficiary) after your death. Premiums are 6.5% of your covered base amount, deducted pre-tax from your retirement pay.
The math for an E-7 retiring at $2,700/month: premium is ~$175.50/month. Spouse receives $1,485/month upon the retiree's death.
SBP becomes 'paid up' after 360 payments AND reaching age 70 (whichever comes later) — premiums stop but coverage continues for the survivor's lifetime. If you retire at 40 and live to 70, you've paid ~$63,000 in premiums for potentially decades of survivor coverage.
The math, the alternatives, and how to decide
The alternative is private term life insurance — typically cheaper for younger, healthy retirees. But term expires. SBP never does. Also, SBP adjusts with COLA each year, while term life is a fixed death benefit that loses purchasing power to inflation.
DIC (Dependency & Indemnity Compensation) at $1,699.36/month is available to survivors of veterans who die from service-connected conditions. DIC offsets SBP — if your survivor qualifies for both, SBP is reduced. This makes SBP less valuable for veterans with high-rated, life-threatening service-connected conditions.
Decision framework: SBP makes the most sense if your spouse has limited earning capacity, you don't have significant other life insurance, and you expect to live past the paid-up point. The enrollment deadline is within one year of retirement — after that, you can't elect into it.