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Advantages & Disadvantages

Advantage: You will leave a guaranteed income to your beneficiary
Eligible beneficiaries under the plan will receive 55 percent of the retiree’s elected amount of coverage.

Advantage: SBP benefits are inflation indexed, and coverage and cost are not affected by illness or age
Unlike many private life insurance policies, SBP coverage will not be cancelled or revoked due to any illness you may have or your age.  Whether you retire at age 45 or 80, you or your spouse’s age or health will never be considered a liability and never impact the cost of the program.  In addition, the receipt of survivor benefits will not be affected by Social Security benefits. Finally, the SBP annuity is protected against inflation, increasing each December with a Cost of Living Adjustment based on the Consumer Price Index. 

Advantage: You can pay for SBP benefits with a pre-tax payroll deduction
For nearly all retirees, Survivor Benefit Plan premiums are automatically deducted from your gross pay prior to the deduction of federal income tax. This decreases your total taxable income.

Disadvantage: Cost
SBP coverage is supplied at no cost while you are in active service.  During your retirement, however, a monthly deduction is taken from your pay to pay for your SBP coverage. This can be as much as, but no more than, 6.5 percent of your gross retired pay.

You might consider the relationship between the cost of the program and its benefits.  To earn an even return on your investment, your beneficiary typically must receive payment for seven months for every five years you pay SBP premiums.. 

Disadvantage: Once you enroll, changing your election is difficult
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.  For example, if, at retirement, you have an eligible spouse or children and decide not to have them covered under the plan, it will be very difficult to have your current or any future spouse or children covered under the plan in the future.

Learn more about SBP

  • Enroll - How to set up your SBP account
  • Eligible beneficiaries - Find out who can be covered
  • Cost - What SBP costs at the different coverage levels
  • Paying for SBP - How you can pay
  • Update beneficiary - How to update beneficiaries or update contact information
  • Change or stop coverage - When you can change coverage or beneficiary 
  • Educate your beneficiaries - What your beneficiary needs to know
  • What happens when you die - Next steps for your beneficiary

Read about these topics at SBP overview Page updated January 31, 2012