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  5. Beneficiaries and Coverage Levels

    Eligible Beneficiaries

    When you apply for retirement, you will be asked to complete a Data for Payment of Retired Personnel form (DD 2656). On that form, you will need to choose a type of beneficiary. The types you may choose from are described below.

    Spouse Only

    The most common election for a retiree to make is for only his or her spouse to be covered based on full retired pay. Cost is calculated at a maximum of 6.5 percent of the elected level of coverage.

    If you have an eligible spouse and you choose anything less than full coverage, the spouse’s notarized signature must be obtained for the election to be considered valid.

    Spouse and Children

    With this option, the children covered under the plan must be the children of the spouse that is covered. If you have children and choose not to cover them, you will not be able to change that election later. 

    An eligible dependent child under the plan must be:

    • Your legal child
    • Under the age of 18
    • If older than 18, enrolled in an accredited college or university
    • Unmarried

    Children enrolled in higher education are eligible until they reach age 22 or leave school.

    Incapacitated or disabled children are eligible. An incapacitated or disabled child is defined as a child who is incapable of self-support because of a physical or mental disability which existed before the 18th birthday or which was incurred before age 22 while child was pursuing a full-time course of study.

    Adding eligible children to an SBP election will add to the cost.  The additional cost depends on the age of the retiree, spouse and the youngest child.

    Former Spouse

    Please keep these factors in mind when considering SBP coverage for a former spouse.

    1. Former Spouse Election at the Time of Your Retirement

        a.  If you have a former spouse when you first retire and become eligible to participate in the SBP, then you may elect former spouse coverage.  (Please note different rules apply for reservists, because of their opportunity to participate in Reserve Component SBP when they receive their 20-year letter.)

        b.  If you’re married when you become eligible to participate in the SBP and have been court-ordered to cover a former spouse, you can do so without your current spouse’s signature. 

        c.  If you’re married at the time you become eligible to participate in the SBP, but you want to voluntarily cover your former spouse, DFAS will be required to notify your current spouse of that election.

        d.  You may elect coverage for your former spouse at the time of your retirement even if you divorced more than a year before your retirement and becoming eligible to participate in the SBP.  

    2.   Former Spouse Coverage after retirement

    If you’ve already retired and you want to elect former spouse coverage, or the court has ordered you to do so, you must make a former spouse election within one year of your divorce decree.

    3.  Your Former Spouse’s Right to Request SBP Coverage (aka “Deemed” Election Requests)

    • If you’ve been court ordered to elect former spouse SBP, then your former spouse can submit his/her own request to DFAS for former spouse SBP coverage.  This is known as a “deemed election request.”
    • Even if you divorced more than a year before retirement, your former spouse can submit a deemed election request, but the request must be submitted within one year of the order requiring former spouse SBP coverage. 
    • If your former spouse submits a proper deemed election request within one year of the court order requiring former spouse SBP coverage,  then former spouse SBP coverage will be entered on your account, even if you don’t make a former spouse election.

    Children Only

    If you're married and you choose not to cover your spouse, you must get concurrence from your spouse.  If your spouse concurs by signing the form, or if you are unmarried, you can elect to cover your dependent children.

    The cost for this option depends on the age of the retiree and the youngest child. 

    Natural Interest Person (NIP)

    If you have no other eligible dependents, you can elect to cover an individual in whom you have a legitimate insurable interest.  Examples might be a brother or sister, or a child who is beyond eligibility for child coverage. 

    Although the annuity benefits of NIP coverage are the same (55 percent of covered pay), the cost (10 percent of your gross pay) is considerably higher than other elections. 

    Unlike other SBP elections, NIP coverage can be cancelled any time. 

    A retiree can only elect NIP coverage at retirement.

    No Beneficiary

    If you do not have any eligible beneficiaries, you are not required to elect coverage at the time of retirement.  It is necessary, however, for you to tell us you have no beneficiaries, rather than simply not making an election.

    Decline

    If you do not consider SBP a worthwhile investment, you may elect not to participate.  If you are married and decline to cover your spouse, you must obtain your spouse’s notarized signature.  In this case, no deductions will be taken from your pay and no benefits will be paid after your death.

    Learn more about SBP

    • Advantages & disadvantages - Things to consider before enrolling
    • Enroll - How to set up your SBP account 
    • 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