Spouse Coverage

Spouse coverage is the primary SBP option. It is designed to provide a lifetime monthly income for your surviving spouse after you die. The key aspects of this SBP option are below:

Benefit Payments

The SBP annuity is determined by the base amount you elect. The base amount may range from a minimum of $300 up to a maximum of full retired pay. The annuity is 55 percent of the base amount. The base amount and the payments to the surviving spouse will generally increase at the same time and by the same percentage that cost-of-living adjustments (COLAs) are made to retired pay.

Spouse Remarriage

Your surviving spouse may remarry after age 55 and continue to receive SBP payments for life. If your surviving spouse remarries before age 55, SBP payments will stop, but may be resumed if the marriage later ends due to death or divorce.

SBP Costs (Premiums)

The SBP premiums for spouse coverage are:
  1. 6.5% of your chosen base amount, or if less,
  2. 2.5% of the first $725.00 of the elected base amount (referred to hereafter as the "threshold amount"), plus 10% of the remaining base amount.
The threshold amount was $725.00 as of January 1, 2010. For new retirees, the threshold amount increases at the same time and by the same percentage as future active duty basic pay. For existing SBP-electing retirees, it increases with future COLAs.

If you became a member of a uniformed service on or after March 1, 1990, and you are retiring for length of service (not for disability), and you are not retiring under reserve retirement, SBP costs will be calculated only under the formula in (1) above. Otherwise, it will be the lesser of (1) or (2).

The following table shows the costs associated with several "base amount" options and the benefits your spouse will receive based on these options.

Base Amount
SBP Costs
SBP Benefits 55% of Base Amount
 $300.00 $7.50 $165.00
 $1,000.00  $45.63  $550.00
 $1,553.00  $100.93 $854.15
 $130.00  $1,100.00
 $2,500.00  $162.50  $1,375.00

* The SBP costs used in column 2 are calculated using the formula that provides the least cost. On January 1, 2010, the breakeven point between the two formulas was $1,554. If the base amount was greater than or equal to $1,554, the formula in (1) was used. For base amounts less than $1,554, the formula in (2) was used. The next table shows what can happen after retirement when inflation is 4 percent per year. Retired pay is increased annually to keep pace with inflation. Survivor payments are generally increased at the same time, by the same percentage. These increases are made even after the member dies.

Your Age
Cost of SBP
 $130.00 $1,100
 $158.15  $1,338
 $192.40  $1,628
 $234.07  $1,981
 $284.77  $2,410
 $346.45  $2,932
 70*  68 $6,484
 $421.46 [$0]
 80*  78  $9,597 $623.81 [$0]
 90*  88  $14,205  $923.33.[$0]  $7,813

*At age 70 or older, a member who has paid premiums for 30 years (360 months) is considered "paid-up" and no further premiums are deducted from retired pay. However, SBP coverage continues. The table shows the premiums for both situations (i.e. not paid-up and $0 for paid up).

In this example, the annuity at age 90 would be nearly four times the covered retired pay at age 40 and over seven times what the benefit would be at the time of the election. This demonstrates two very favorable features of SBP:

  1. Payments never run out.
  2. Payments increase along with the increase in costs-of-living.

If you die shortly after retirement, your surviving spouse could receive cost-of-living adjusted payments for 50 years or more. Lifetime payments from an original election to cover $2,000 of retired pay could total more than two million dollars.

Tax Savings

Monthly SBP costs are not included in your taxable Federal income. The true cost for SBP is therefore less than the amount deducted from retired pay because less Federal tax will be paid. As an example, if you are in the 28 percent Federal and State tax bracket, the true cost of a $100 SBP premium is $72. The $72 should be used when comparing the cost of SBP to a comparable cost of commercial life insurance. SBP payments to survivors are taxable, but spouses usually receive benefits when their total income is less and the extra tax exemption for being over age 65 is applicable. The surviving spouse's tax rate is likely to be lower and a long-run significant tax savings would result.

Loss of Spouse

If your spouse dies first or you get divorced, SBP costs will stop (once you notify DFAS).

In divorce cases, spouse coverage may be converted to former spouse coverage. In some instances of divorce, conversion to provide coverage for the former spouse may be required by court order.

Unmarried at Retirement

The member who is unmarried upon retirement may elect SBP coverage for the first spouse acquired after retiring. However, the election must be submitted to DFAS before the first anniversary of that marriage.