Don’t Lose Sleep Over the SBP

DFAS-SBP-pillowIn the months leading to retirement, many service members are overwhelmed with a number of decisions and must dedicate a lot of time attending transition classes, job hunting, and navigating the VA medical process. With so much going on, they often wait until the last minute to make one of the most important decisions of their lives – whether or not to enroll in the Survivor Benefit Plan (SBP).

When enrolled in the SBP, a monthly premium payment is withheld from your retirement check and after your death, a monthly payment is made to the person you chose for the remainder of their life. In other words…not enrolling in the SBP means your retirement payments stop when you die and your loved one DOES NOT receive any monetary benefits.

If you’re married, your personal SBP election must be made with your spouse. In fact, if you choose NOT to enroll or select a reduced benefit, you must obtain your spouse’s approval via a notarized signature. Based on factors like, your financial situation, your children’s ages, and your spouse’s ability to earn income, the SBP may not be the right choice for you. Some soon-to-be retirees are able to purchase a 20 or 30 year term life insurance policy with a lower monthly payment and a higher after death benefit. I highly recommend trying to obtain additional life insurance prior to beginning the VA medical process!

The best way to determine what’s right for you, is to compare the SBP with a term life insurance policy. The DoD Office of the Actuary provides an updated excel file on their website to help you decide – SBP Insurance 2016. In addition, most installations have a SBP representative who can assist you.

 

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