Survivor Benefit Plan (SBP) - Show Me The Money
A question we frequently hear from older members is, "I've been paying into SBP for decades. The government has made a lot of money on me. Why can't I get some of that money back after all these years?"
Anyone who thinks the government is making money on SBP is way off-base. As shown in the chart below, the government currently pays out more than twice as much in SBP benefits to survivors than it collects in retiree premiums. And that difference will continue to grow, since we recently won a benefit increase for survivors age 62 and older.
For members retiring after 20 or more years of active duty, the government expects that the average retiree's lifetime SBP premiums will only cover about 60% of the average benefits that will be paid to the retiree's survivor.
That means three things:
- Your SBP benefit is 40% subsidized by the government to help recognize the value of your service…(much different than the negative subsidy of civilian insurance, for which premiums must cover 100% of benefit costs, as well as company overhead, salaries, commissions, and profit).
- Much like Social Security, every dollar you pay in SBP premiums goes toward paying part of the benefit for someone else's survivor, just as other retirees' premiums will help fund your survivor's benefits in the event of your death.
- Any civilian insurance that provides "cash back" if you don't die is going to cost you a lot bigger premium per death benefit dollar (and we don't know of any civilian insurance that provides a fully inflation-protected annuity like SBP does).