Survivor Benefit Plan – SBP

A service-member will receive pension benefits until his or her death. This means of course, that the pension benefits stop once the service-member dies – regardless if the ex-spouse remains living and was receiving a portion or those benefits. So the military created a program for service-members’ spouses to continue retirement pay following the death of the service-member. It is called the Survivor Benefit Plan (SBP). The Survivor Benefit Plan (“SBP”) is an annuity program that allows retired (or retirement-eligible) active duty service-members to provide continued income to specified beneficiaries at the time of their death (10 U.S.C. §1448).

A service-member may select spouse or former spouse coverage, coverage for the spouse or former spouse and qualifying children, or simply coverage for the qualifying children only. This program is not free…it is paid out of the retiree’s paycheck. Therefore, it is important to recognize that this payment for SBP will reduce the service-member’s pension income – and, hence, potentially your share of it if you are the soon-to-be ex of the service-member and you are negotiating for your share of his or her retirement. The cost of SBP will depend on the type of coverage selected and the base amount chosen. According to 10 U.S.C. § 1447(6), the base amount may be any amount between $300 and the full amount of the service-member’s monthly retired pay. In very general terms, the premium rate for former spouse coverage is 6.5 percent of the selected base amount. The designated survivor would then receive a lifetime annuity of 55 percent of the designated base amount.

There is no simple answer as to whether or not you and your attorney should negotiate for SBP coverage. Also, know that life insurance may be a cheaper alternative although not necessarily a better option. Among the issues we would discuss with you is your financial situation. In the event that your spouse or ex-spouse dies and the pension benefits were to stop, do you have adequate income from all other sources to handle your loss of pension income? Our standard position is to insist on SBP, since private insurance companies sometimes fail, whereas the stability and solvency of the U.S. Government is less in doubt. While SBP may be somewhat costly, it does not require that either you or your spouse undergo a physical exam, unlike the requirements of many life insurance companies. Another advantage is that your ex cannot terminate SBP coverage without your consent. However, you should know that once SBP is decided upon AND elected, it cannot be cancelled. There are no returns of premiums paid if you die before your service-member ex, and it has no equity build-up or cash surrender value like some life insurance policies. This is a lot to take in and consider on top of everything else. Understanding the concept and the pros and cons of SBP, however, is a very good start as you enter negotiations with your soon-to-be ex and as you begin to discuss your options with your attorney. You might also consider adding a life insurance clause in case your ex-spouse dies while child support or college expenses are still due. Life Insurance is quite a bit different than SBP, but it is a topic that goes hand-in-hand with SBP benefits and it is certainly worth discussing with your attorney.

There is no simple answer as to whether or not you and your attorney should negotiate for SBP coverage. Also, know that life insurance may be a cheaper alternative although not necessarily a better option. Among the issues we would discuss with you is your financial situation. In the event that your spouse or ex-spouse dies and the pension benefits were to stop, do you have adequate income from all other sources to handle your loss of pension income? Our standard position is to insist on SBP, since private insurance companies sometimes fail, whereas the stability and solvency of the U.S. Government is less in doubt. While SBP may be somewhat costly, it does not require that either you or your spouse undergo a physical exam, unlike the requirements of many life insurance companies. Another advantage is that your ex cannot terminate SBP coverage without your consent. However, you should know that once SBP is decided upon AND elected, it cannot be cancelled. There are no returns of premiums paid if you die before your service-member ex, and it has no equity build-up or cash surrender value like some life insurance policies. This is a lot to take in and consider on top of everything else. Understanding the concept and the pros and cons of SBP, however, is a very good start as you enter negotiations with your soon-to-be ex and as you begin to discuss your options with your attorney. You might also consider adding a life insurance clause in case your ex-spouse dies while child support or college expenses are still due. Life Insurance is quite a bit different than SBP, but it is a topic that goes hand-in-hand with SBP benefits and it is certainly worth discussing with your attorney.

Contact Military Divorce, P.C.

As we mention throughout this website, it is important to recognize that there are many steps and often many months that must be endured before a final divorce is granted by the courts. When you are ready – mainly psychologically and emotionally to begin this process, the next step is to contact an attorney to handle the legal aspects.

You can contact us to set up a confidential, 1-hour consultation to discuss your case with an attorney. We’ll help you from there. Call us at (757) 961-3321. We have two offices centrally located in Virginia Beach and Chesapeake, VA. We are lawyers specializing in military divorce serving Virginia Beach, Chesapeake, Norfolk, Portsmouth, Suffolk, Hampton Roads, VA. You may also visit Google Business page for Military Divorce

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