A smiling military officer in a white uniform hugs a person holding a rose. The text reads: What is SBP Coverage? Discover Alternatives to SBP in our Veterans Survivor Benefits Guide. Veterans Benefits. US-Vet Wealth. The background is blurred, emphasizing the importance of planning for veteran retirement pay.

What Are Options to Cancel Military SBP Coverage?

Transitioning from military to civilian life involves many decisions, especially protecting your family’s financial future. The Survivor Benefit Plan (SBP) is a commonly offered solution to provide ongoing income for a deceased military retiree’s spouse, but it has its limitations. When considering the SBP, it’s important for military retirees to weigh their options for accepting or declining the survivor benefit plan. Some may elect to decline the SBP in order to receive a higher retirement income and privatize their pension insurance. While others may choose to accept it as a way maintain government benefits for their spouse.

This guide will help you understand SBP, its pros and cons, and how it compares to alternative options.

What is the Survivor Benefit Plan (SBP)?

The Survivor Benefit Plan is a government-sponsored program to provide ongoing income to a service member’s spouse or dependents after death. If you elect to participate, a portion of your retirement pay is withheld to fund the plan. In return, your designated beneficiary receives up to 55% of your retired pay for life (or until certain conditions change, like remarriage).

Who is Eligible for SBP?

SBP is available to military retirees, active-duty service members, and their eligible beneficiaries. Here’s a breakdown:

  • Military Retirees: Retirees must decide whether to enroll during retirement processing.
  • Active Duty Service Members: Automatically covered at no cost while serving.
  • Beneficiaries: Typically, a spouse, children under 18 (or 22 if full-time students), or disabled dependents.

How SBP Works: Contributions and Benefits

SBP requires participants to contribute a portion of their retirement pay, typically up to 6. 5%, to sustain coverage. In exchange, the beneficiary receives a monthly payout based on a percentage (up to 55%) of the retiree’s elected base amount. The amount of retirement pay with 20 years of service can vary depending on a retiree’s rank and years of service. For example, a retiree with 20 years of service may receive a higher base amount than someone with fewer years of service. This means that the monthly payout through SBP could be higher for those with more years of service and a higher retirement pay.

For example:

  • If your retired pay is $4,000/month and you choose full coverage, your spouse would receive 55% of $4,000, or $2,200/month.
Cost of govt insurance for O5

The Limitations of SBP

While SBP provides a safety net, it has its drawbacks:

  1. Cost Over Time: Premiums are deducted for life, even if the benefit is never used.
  2. No Change of Beneficiary: If the spouse pre-deceases the retiree, there is no option to leave benefits to children or recoup costs.
  3. No Cash Value: Unlike life insurance, there is no accumulated value or payout if the benefit isn’t used.
SBP details and graph

Alternative Options to SBP

SBP may be a better fit for some families. Here are some alternatives:

  1. Life Insurance: A private life insurance policy can offer more flexibility and larger payouts without offsets.
    • Term Life Insurance: Affordable but limited to a set period.
    • Permanent Life Insurance: More expensive but builds cash value and lasts a lifetime.
  2. Savings and Investments: Build a diversified portfolio of savings, investments, and other assets.
  3. Hybrid Solutions: Combine SBP with life insurance or other investments to balance immediate coverage with long-term growth.

Q: What happens to SBP if I remarry?

A: If a surviving spouse remarries before age 55, they lose SBP eligibility. However, the benefit can be reinstated if the subsequent marriage ends.

Q: Are SBP payments taxable?

A: Yes, SBP benefits are considered taxable income.

Q: Can I stop SBP coverage later?

A: There is a one-time option to terminate SBP between 24-36 months after military retirement.


We Can Help You Make the SBP Decision Easier

Choosing SBP or an alternative financial solution is a personal decision that depends on your family’s needs, financial goals, and risk tolerance.

Consider the following:

  • What level of income does your family need to maintain their lifestyle?
  • Are you comfortable with SBP’s costs and limitations?
  • Would private life insurance or other investments provide better value?

At US VetWealth, we help military families navigate the SBP decision and qualify for alternative life insurance options. Explore our personalized financial strategies to secure your loved ones’ income independence beyond the Survivor Benefit Plan. Our team of experts understands the unique needs of military families and can provide guidance on the best options for ensuring financial security. We can also assist by teaching you our opt-out decision method for the Survivor Benefit Plan and help you consider alternative life insurance solutions. Let us help you create a customized financial plan that addresses your specific concerns and ensures peace of mind for you and your family.

Contact Us for a free consultation or download our SBP vs Life Insurance guide to learn more.


Scott Tucker About Photo (1) 2

Scott R. Tucker

Scott R. Tucker is an author, speaker, and founder of US VetWealth, a military retirement financial consulting brand dedicated to helping military retirees take control of their financial future. A West Point graduate and former Army officer with over 16 years of experience, Scott has guided thousands of veterans in creating personalized financial strategies prioritizing autonomy, protection, and profitability. Through his books, presentations, and innovative online platform, Scott empowers retirees to maximize their benefits and build a secure, purpose-driven future.


Disclaimer: The views expressed by Scott R. Tucker are for educational purposes only and do not constitute financial, tax, or legal advice. Scott is a licensed insurance professional offering financial services and products. Always consult with a qualified advisor before making financial decisions.

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