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Home : News : News
NEWS | July 17, 2018

Soldiers should consider Survivor Benefit Plan before retiring

By David Vergun Army News Service

Soldiers nearing retirement should consider not only where they want to live, work, or go to school after the Army, but also whether they want to participate in the Survivor Benefit Plan.

The primary reason for participating in the SBP is to provide a monthly annuity to the spouse and/or children of a retiree who dies -- because when a retiree dies, retired pay stops.

Couples don't have to go it alone when making a decision about SBP, said Mark E. Overberg, director of Army Retirement Services.

Overberg said Retirement Services Officers can help Soldiers make informed decisions about SBP, and navigate through the administrative process. Additionally, he said, RSOs can help those who have already retired, as well as the spouses of those Soldiers who are deceased.

"Federal law provides for automatic coverage of all eligible dependents at the time of retirement unless the Soldier requests otherwise. The law also requires SBP premiums be deducted from retired pay," Overberg said, adding also that while SBP is not free, it is not overly expensive.

For a retiree who elects SBP with just a spouse and no children, the amount of SBP premium deducted from the retiree's gross pay is 6.5 percent, he said. If there are children, that amount will increase slightly.

Overberg said that typically, annuity payments are made to surviving spouses. However, if a spouse dies or remarries before age 55, for instance, annuity payments will be made to a service member's surviving un-married children. Those payments continue until a child reaches 18 years of age. If surviving children are full-time students, however, payments continue until 22 years of age.

A Soldier and his or her spouse can elect a lesser SBP amount, and premiums and annuities would decrease accordingly, Overberg said.

Overberg emphasized that SBP is not a life insurance plan. Rather, it's a benefit. Furthermore, SBP has some important benefits over life insurance, he said.

For example, SBP cannot be denied or decreased due to a Soldier's pre-existing health conditions, he said. Also, while the premiums do increase annually based on cost-of-living adjustments, so will the annual annuity amount paid out to the survivors even after the retiree's death.

Additionally, the government pays the SBP annuity to surviving spouses and children irrespective of the retiree's cause of death, he said. Many insurance plans have clauses in them that do not do that.

Another plus for participating in SBP is that the survivor can draw Social Security benefits without any offset of SBP annuities, he noted.

If a surviving spouse remarries before age 55, however, SBP is suspended, he said. However, if that marriage ends by death or divorce, the surviving spouse can contact DFAS to resume SBP annuity payments.

Retirees who opt in for SBP while also receiving Veterans Affairs disability compensation that completely offsets their retired pay will receive a monthly bill from DFAS for premiums. The retiree could also contact the VA to arrange automatic payments from their disability compensation, Overberg said.

He cautioned that unpaid SBP premiums will continue to accrue with interest, which must be paid at some point.

The VA Disability Fact Sheet explains the payment procedure in greater detail and is in the links section at the bottom of this page.

SBP also provides an annuity for a Soldier who dies while on active duty or inactive duty training, Overberg said.

There's another way surviving spouses can receive a monthly annuity outside of SBP, he added.

The VA pays a monthly annuity, called Dependency and Indemnity Compensation, to survivors of retirees whose death was service-related. The VA pays all of the premiums for DIC. All DIC recipients receive the same monthly payment, which is $1,283 per month in 2018, irrespective of rank or length of service. The payment is adjusted for annual cost of living.

Before Soldiers retire, they can opt out of participation in SBP, but this requires their spouses' approval to do so. Both will need to sign Department of Defense Form 2656 "Data for Retired Pay." Not doing so means automatic opt in, Overberg said. He added that the Army encourages spouses to attend SBP briefings and that Soldiers and their spouses make joint SBP decisions.

The retiree may also opt out, with the spouse's concurrence, between the second and third year of retirement by notifying DFAS in writing.

The retiree may also withdraw for disability if they are rated totally disabled by the VA for five years starting at retirement. or for 10 years if rated totally disabled after retirement.

"Although it may seem unnecessary to consider providing for your loved ones until later on in life, please be aware that the decisions you make at retirement regarding your SBP can be difficult to change," he said. "For example, if, at retirement, you have an eligible spouse or children and decide not to have them covered under the plan, federal law prevents you from covering your current or any future spouse or children."

Soldiers who want more information about the SBP can contact their closest Retirement Services Officer or the MyArmyBenefits Help Desk, Monday-Friday from 9 a.m. to 5 p.m. Eastern Time at 1-888-721-2769.