The Survivor Benefit Plan (SBP) Explained

What is the Survivor Benefit Plan?

When a U.S. military service member retires, they can enroll in the Survivor Benefit Plan, or SBP,  a program that provides a portion of their monthly military retirement pay to their designated beneficiary (or beneficiaries) when they die.  

The premiums required to pay for SBP coverage are deducted directly from the veteran’s military retirement pay, and the cost depends on what portion of that retirement pay they elect to replace. When the retiree dies, their beneficiary receives up to 55% of their retirement pay each month for life.

Think of the SBP as one leg of a risk management plan that serves to protect a family’s financial security in the event of the unexpected death of a retired service member. Alongside life insurance, investments and savings, this guaranteed source of lifetime monthly income can provide the beneficiary and other family members with the funds they need to meet their expenses and pursue their goals.

The SBP is not just a financial product — it’s a selfless gesture by a retired veteran to ensure their family is cared for after they’re gone.

SBP Eligibility Guidelines

To be eligible for the SBP, a retiree must be entitled to military retired pay, which requires 20 years of service.

• Full spouse coverage is automatic. The retiree may opt out only with the spouse’s signed consent.
• Eligible children must be unmarried and under 18, or under 22 if enrolled full-time in school. Children with disabilities may qualify at any age.
• A non-immediate family member, business partner or someone with a financial interest in the retiree may qualify as a beneficiary with sufficient documentation.

For most military retirees, enrollment in the SBP is a smart, forward-thinking choice. But to determine if it’s the right fit for your family and integrate it into your overall financial plan, consider talking to a financial advisor who is knowledgeable about military pay and benefits.

How Does the Survivor Benefit Plan Work

Form DD-2656 is the document retirees must complete to initiate retirement pay, elect SBP coverage and designate beneficiaries. It asks retiring service members to choose a base amount for SBP coverage, which can be any amount between $300 and their gross monthly retirement pay.

To be clear, this is not the amount that will be paid to your survivors in the event of your death. That monthly benefit will be 55% of the base amount you choose. Once you submit this form, your base amount is fixed, though your monthly premium and the benefit that will be paid to your beneficiary are subject to cost-of-living adjustments (COLA).

After a retiree’s death, their beneficiaries should contact the Defense Finance and Accounting Service (DFAS) as soon as possible. They’ll need to complete verification paperwork and submit a death certificate. Processing generally takes 1-2 months, and then the beneficiary will begin to receive the monthly annuity.

Important note: Retirees have the choice to opt out of the SBP. That decision may save some money in the short-term, but it comes with significant long-term consequences. Once a retiree declines SBP, the decision is irreversible — there’s no option to re-enroll later. If the retiree has dependents, they’ll receive no portion of the military pension after the retiree’s death, which could create a significant financial shortfall.

Benefits of the SBP

The SBP is a rare mix of affordability, longevity and predictability — all quite valuable in uncertain times. The SBP:

• Provides a steady income for the family of a deceased military retiree
• May last for the life of the beneficiary or beneficiaries
• Is adjusted annually for inflation
• Is government-subsidized, so it’s more affordable than many private plans
• Doesn’t require a medical exam
  

How Much Does the SBP Cost?

The cost of SBP coverage depends on the level of coverage selected and which beneficiaries are designated. For retirees who elect spouse-only coverage, the premium is 6.5% of the elected base amount, which can range from $300 to the full amount of gross retired pay.

There are options for child-only coverage, or spouse-and-child coverage, which involve additional calculations based on the age of the retiree, spouse and child.

SBP premiums are deducted pre-tax, a helpful perk which can reduce taxable income. Also, once the plan has been paid into for 30 years, and the retiree reaches age 70, the coverage becomes paid-up, and no more premiums are required.

Changes to the SBP in 2025

There have been a few noteworthy changes to the SBP in fiscal year 2025:

• A 2.5% COLA was applied to SBP annuities, effective Dec. 1, 2024.
• The low-cost premium threshold increased by 4.5%, meaning those who elect for less coverage may qualify for lower tax rates.
• DFAS began handling all direct SBP premium payments in-house.
• Starting Oct. 1, 2025, DFAS will no longer accept checks or money orders for SBP premium payments. Recipients must submit information for direct deposit.

Is the SBP Right for You?

For retirees with spouses or children, the SBP can provide robust advantages. Chief among them is the steady stream of income for surviving family members, and the peace of mind that comes with knowing they’ll have a guaranteed monthly income to support their lifestyle. Although SBP premiums may reduce monthly retirement pay, the lifetime annuity for survivors can far exceed the program’s upfront cost.

The SBP may offer less tangible value for single retirees. Without a spouse or eligible dependent to receive the annuity, it can seem like an unnecessary expense. In these cases, those funds might be better directed towards investments, savings, or other long-term plans that offer personal benefit and flexibility.

However, there may be some cases in which it would be prudent for unmarried retirees without dependents to opt in to SBPs. A non-immediate family member (like a parent, a sibling, or a niece or nephew) or unrelated beneficiary can be named if they depend on the retiree for financial support or have a financial interest in the retiree’s life, like a business partner.

For veterans planning to have a family later in life, they can begin contributing to the SBP immediately and convert to spouse or child coverage when ready.

Ultimately, deciding whether to participate in the SBP, and to what degree, is a personal financial planning decision, so consulting a financial advisor who is knowledgeable about military benefits is recommended.

FAQs

Is participation in the SBP mandatory?

Anyone can opt out of the SBP, but for people who don’t make a decision, they’ll be automatically enrolled.

For married people who choose to decline the SBP, their spouse must sign a notarized statement agreeing with the decision.

The SBP is automatic and at no cost for those on active duty. The annuity is calculated as if the deceased member had retired with 100% disability. Beneficiaries are designated by Title 10 of the U.S. Code, typically in the following order: Spouse, children, former spouse, and insurable interest parties.

Can I change my SBP election after retirement?

Yes, but the options are limited:

• You may change your SBP election within one year of gaining a spouse or child.
• Spousal coverage can be converted to former spouse coverage within one year of a divorce decree.
• If a beneficiary dies, coverage may be adjusted. This could mean canceling the SBP if no other eligible dependents exist or updating your election within one year if you gain a new spouse or child.
• Retirees with 100% disability for over 10 years can withdraw from SBP with their beneficiary’s consent.
• Between the 25^th and 36^th month after retirement, retirees may cancel SBP coverage. This is a one-time-only, irrevocable exit window that requires spousal concurrence.
  

What if my beneficiary dies before me?

You must notify DFAS as soon as possible, and SBP premiums tied to that beneficiary will stop. Then, the plan enters a suspended status but is not canceled.

If you gain a new eligible beneficiary, you typically have one year to update your SBP election. If no new eligible beneficiary is acquired, the plan remains suspended indefinitely.

Can reservists participate in the SBP?

Yes, reservists can participate in the Reserve Component Survivor Benefit Plan (RCSBP) if they have completed at least 20 qualifying years of service.

What’s the difference between SBP and life insurance?

SBP monthly premiums are fixed, while life insurance premiums may increase with age. SBP annuities are automatic and steady, whereas life insurance provides a one-time, tax-free lump-sum payment to beneficiaries. Many veterans use both for additional coverage and versatility.

Guarantee depends on the claims-paying ability of the issuing insurance company and does not apply to the investment return or principal value of the separate account. Before buying an annuity, you should find out about the particular annuity you are considering. Request a prospectus from your Financial Advisor and read it carefully. The prospectus contains important information about the annuity contract, including fees and charges, investment options, death benefits and annuity payment options.