What is a Survivor Benefit Plan?

A survivor benefit plan, or SBP, is a financial planning option that is often offered to individuals who serve in some branch of military service. Essentially, this type of plan helps to ensure that the spouse of a deceased military retiree continues to receive financial support for the remainder of his or her life. In situations where the retiree does not have a spouse, children may be designated to receive the benefits. For military retirees who do not have immediate family, the beneficiary of the survivor benefit plan can often be a close friend or even a business partner.

The exact structure of a survivor benefit plan will vary, based on the nation or branch of the military that provides this type of benefit for its members. While there are differences, there are also a number of benefits found in just about any version of this plan. For example, this type of plan is often offered in addition to regular retirement benefits, which means that in the event that the retiree dies soon after retirement, the spouse will continue to receive those benefits until they are exhausted. At that point, the SBP activates and the survivor continues to receive regular annuities for the remainder of his or her life.

Some examples of the survivor benefit plan also provide for adjustment in the amount of that monthly annuity based on the current rate of inflation. The idea here is to make sure the amount received by the survivor is equitable in terms of providing the resources necessary to sustain an equitable standard of living. In addition, many plans allow for the orderly transfer of benefits in the event that the survivor should die before the benefits are exhausted. This would mean that if the benefits were provided to a spouse who passes away, the benefits may be claimed and provided to a child of the couple.

Enrollment in a survivor benefit plan typically requires the consent of both the active military member and the spouse. In addition, any changes to the plan, including changing the name of the survivor, requires the consent of both spouses. While funding processes for this type of military survivor benefit plan vary, most require regular contributions that are deducted from the military pay during the active years of service. Once a certain minimum number of payments have been contributed to the plan, it is considered paid in full and available for activation after the military member passes away. Some plans have restrictions relating to the extension of benefits to surviving children, with most providing benefits up to the age of 22 if the child remains enrolled in a college or university.