Veterans Survivor Benefits Guide: What is SBP Coverage?

Veterans Survivor Benefits Guide
by Scott R. Tucker // December 9 /

For a military spouse, surviving your veteran is not just about surviving the death of your spouse. You’re also faced with finding financial security and stability for yourself and any dependents you may have. This guide will explain what SBP coverage is and how it can be used to protect the value of your military pension in case something happens to you or if you predecease your surviving spouse.

I'll also introduce some new thoughts and perspectives about what you are committing to financially and the limitations of the benefit payments to eligible surviving spouses.

If you read to the end you learn about education resources we've created and life insurance solutions we've designed to better solve this problem.

What is the Veteran's Survivors Pension

A surviving spouse is eligible to receive the survivor benefit plan, a type of veteran survivor's pension if the minimum active duty service requirements are met.

What is SBP coverage?

SBP, or the Military Survivor Benefits Plan, was developed in 1972 to provide surviving spouses with protection for their military pension if something were to happen to them or if they predecease the service member. This plan has often been a lifesaver for a surviving spouse, but it's not without its problems.

The biggest problem with SBP coverage is that surviving spouses aren't receiving the full amount of the surviving spouse's pension. This means surviving spouses lose out on potential money to help them financially after a loss of income.

SBP details and graph

Rethinking the SBP Benefit for a Surviving Spouse 

I first learned about the Survivor Benefit Plan (SBP) when I separated from the military and entered the financial industry.

When I was on active duty, I had never heard of anything about SBP payments, and I had never thought about it. So I started to learn about it.

I eventually read a new book at the time called Tax-Free Retirement, by Patrick Kelly, which taught me about innovations in life insurance products and income protection strategies.

This happened to coincide with the 2008 financial crisis when seasoned certified financial planners were at a loss to answer the questions their clients were grilling them with. They needed answers to solve a problem but kept looking at the old solutions.

I was new to the game and stumbled into the basics of what Kelly laid out. An approach for higher-income earners to get better returns on their investments.


Protect Retired Pay and More

I came to realize that many Veterans who earn a pension and second salary easily qualify for this approach but wouldn't have had a reason to learn about it until their retirement brief.

And the real secret I discovered was how this approach to replacing the survivor benefit plan not only protected the family income in the case of the veteran's death but would also increase the total available income in the family budget while everyone is still alive and enjoying life.


How to Replace the SBP Annuity

We researched to find the exact kind of insurance design that can solve the SBP problem, we also found that there are specific companies that are way ahead of the game in how they design modern life insurance products.

For the high-income earners, these companies are solving the problem of the SBP government insurance trap. The old solutions simply aren’t working to solve these problems.

Cost of govt insurance for O5


How Long Do You Pay into SBP?

The typical structure that is automatically built into the pension for most retiring military families is as follows. 6.5% of the pension will be removed each month pre-tax from your retired pay for 30 years or until the veteran died.

The trade-off for this reduction of the monthly benefit is a death pension of 55% of the retired pay to eligible survivors. This means the life of the spouse or until a surviving child comes of age.

There are exceptions of course and this doesn't cover any VA compensation.


Tax status on withdraws


VA Benefits Work Different For High-Income Earners

I'm not sure if this is taboo, or if some are just unaware of how much money they make on active duty or as veterans benefits compared to normal civilians.

Just the fact you are searching for more information and found this page already puts you in the 1%. You likely have financially positioned yourself to avoid SBP costs, the other 99% often learn about alternatives too late.


Wartime Veterans: Insurance with a Service-Connected Disability 

We recognize that these new insurance tools are different, and as different tools, they bring different opportunities.

One common misunderstanding is that veterans with a va disability rating can't get life insurance on the private market. That's not true. The difference between federal group life insurance and private life insurance is mainly about qualification requirements. Private insurance requires underwriting, so that means they make their own decision. They don't base it on what the VA says about your health.

We reflect this reality in how we approach life insurance for military and service connected disabled veterans.

We design the insurance policies so that they can work for service members and veteran families in the most efficient way and with the highest probability of providing a good return on investment—by far better than anything else we've ever seen in our decades of experience.

What is often overlooked is that SBP benefits will only cover 55% of the pension. You have no other options to also pay SBP premiums to cover your Veteran affairs benefits.

This is why we created a better survivor benefit plan alternative. They are valuable aspects of many benefits not covered in monthly payments to an unmarried surviving spouse.

With all the jargon and confusion around DIC benefits, veterans affairs or health care coverage, even burial benefits it's hard to know what gets paid when and if at all.

What if you could design a privatized solution that covers all of that more efficiently, but with no additional cost out of your family budget? Even if your Veteran is totally disabled from wartime service there's a misconception that he or she wouldn't meet eligibility requirements for life insurance as easily as an active military service member does.


You Don't Have To Follow The Status Quo

What’s more valuable to you about your money, that it makes you rich or that it gives you time?

The fact that we spend all of our time just to get money and then have no idea what to do with it is crazy. The key to happiness is to do just the opposite: we need to know what we want to do with ourselves and then spend our money to get more time so we can do that thing that we most want to do. 

We created a modern-day solution for a surviving spouse with a tax-free monetary benefit no matter how you choose to use it.

And we can do this for you without eating into your spending budget any more than what you would have paid for SBP payments. Whether your focus is taking care of minor children replacing monthly payment for retirement, our plan can shift with you as your life and needs evolve.

Military pension protection system logo


Why We Created the Military Pension Protection System

We created the Military Pension Protection System because we want to give high-income veterans access to modern opportunities right now. The standard approach is to do a financial plan with goals of 30 years or more. That isn't realistic in today's rapidly changing economy. The survivor benefit plan was designed in 1972 and hasn't changed since. Its a fixed system with the same costs and benefits for everyone and only pays out when someone dies.

The Military Pension Protection System was designed in 2020, with flexibility built into the core of the strategy. You can customize it to fit your changing needs and lifestyle. And most importantly, you don't have to die for you to realize a return on investment.

What do you have to lose?

We have been uniquely focusing on being veterans and can establish a strategy with you to maximize your military pension and more. 

Implementing Better Surviving Spouse Benefits

You can click here to learn more about the Military Pension Protection System.

Conclusion paragraph: SBP coverage can be an important part of your overall financial security as a military spouse. However, it’s important to understand the limitations of SBP payments and how they may impact your future finances. That’s why I encourage you to schedule a free life insurance consultation today. Our experts will help you determine what coverage is best for you and your family. Don’t wait – protect yourself and your loved ones today.

Scott R. Tucker is an author, speaker and the founder of US VetWealth, a lifestyle and financial consulting brand that helps US Military Retirees achieve more autonomy and work/life balance. He likes to say, "I help the 1% who serve our country become the 1% who influence It." A West Point graduate, serial world traveler, military financial expert, and entrepreneur, Scott brings valuable experience and insight to those who have sacrificed so much in service to our country.

Military Retired Pay O5 guide

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Read our case studies to learn how much retirement income you could reclaim from SBP and re-invest by privatizing your military pension. (Updated for 2023)