Survivor Benefit Plan: Beneficiaries, Costs, and Premiums

The Survivor Benefit Plan is a government-backed annuity that pays your chosen beneficiary up to 55% of a base amount from your military retired pay each month after you die.¹ Military retired pay stops the day the retiree dies, so without this coverage, families that relied on that income have nothing coming in. If you are married or have a dependent child when you retire, you are enrolled automatically at the maximum level, and reducing or declining that coverage requires your spouse’s written, notarized agreement.

You Are Enrolled Automatically

The most important thing to understand about SBP is that you do not sign up. If you have an eligible spouse or dependent child at retirement, coverage is elected for you at the full level, based on your entire gross retired pay.² Action is required only if you want less.

If you are married and want to opt out entirely, choose a base amount lower than your full retired pay, or cover a child but not your spouse, your spouse must agree in writing and the signature must be notarized or witnessed. Without that concurrence, the election defaults back to full spouse coverage on your full retired pay. The narrow exceptions apply when the spouse cannot be located or when exceptional circumstances make consent inappropriate.

If you are unmarried and have no dependent child at retirement, nothing is elected automatically. You can still choose insurable interest coverage, but you have to affirmatively make that election.

Who You Can Name as Beneficiary

Federal law recognizes four categories of eligible beneficiaries, defined in 10 U.S.C. Sections 1447 through 1455. You pick one category at enrollment.

Spouse

Your spouse is the default beneficiary. Eligibility requires either being married when you become entitled to retired pay, being married at least one year before your death, or being the parent of your child.³

Children

A dependent child qualifies if unmarried and under 18, or under 22 and enrolled full-time in an accredited school. A child with a mental or physical disability may remain eligible indefinitely if the condition existed before age 18, or developed before age 22 while the child was a full-time student.³

For a disabled child, you can direct annuity payments into a Special Needs Trust instead of paying the child directly, which helps preserve eligibility for means-tested benefits like Medicaid and Supplemental Security Income. The trust designation requires a written election, an attorney’s certification of the trust, and submission to DFAS. Once made, it is irrevocable.⁴

Former Spouse

A former spouse can be designated, typically pursuant to a divorce decree. If you were court-ordered to elect former spouse coverage and did not, your former spouse can file a deemed election request with DFAS by submitting the court order, divorce decree, and DD Form 2656-10 within one year of the court order’s date.⁵ Missing that one-year deadline can permanently forfeit coverage.

Insurable Interest

If you have no eligible spouse or child, you can name someone with a financial stake in your life, such as a sibling or an adult child no longer eligible as a dependent.⁶ Premiums are substantially higher than for spouse coverage.

What SBP Costs

Premiums are deducted from your retired pay each month before federal income tax is calculated, so the deduction also reduces your taxable income.⁷ Cost depends on the base amount you choose and which formula applies to you.

Spouse and Former Spouse Coverage

The base amount can range from a minimum of $300 per month up to your full gross retired pay. A higher base means a larger annuity for your survivor and a higher premium for you.

Anyone who first entered military service on or after March 1, 1990, pays a flat 6.5% of the base amount.⁸ On $3,000 of retired pay covered in full, the premium is $195 per month.

For members who entered service before March 1, 1990, along with disability and reserve retirees, a two-tier formula may produce a lower cost: 2.5% on the first $1,096 of the base amount (the 2026 threshold, adjusted for inflation each year) plus 10% of anything above that.⁹ DFAS applies whichever formula results in the lower deduction.

Insurable Interest Coverage

Insurable interest coverage must be based on your full retired pay; you cannot select a lower base amount. The premium is 10% of your full monthly retired pay plus an additional 5% for every five full years your beneficiary is younger than you, capped at 40% of retired pay.¹⁰ Naming a much younger beneficiary becomes very expensive quickly.

What Your Survivor Receives

Your beneficiary receives a monthly annuity equal to 55% of the base amount you selected.¹ Full coverage on $3,000 of monthly retired pay produces $1,650 per month for the surviving spouse. That 55% rate applies regardless of the beneficiary’s age.

The annuity is taxable as ordinary income and reported on IRS Form 1099-R. Survivors often receive it during years when total income is lower, and many qualify for the additional standard deduction for taxpayers 65 or older.⁷

Cost-of-living adjustments match those applied to military retired pay, follow changes in the Consumer Price Index, and are applied to the monthly payment automatically.

When Premiums Stop

You will not pay SBP premiums forever. Once you have made 360 monthly payments (30 years) and reached age 70, you achieve paid-up status. Premium deductions stop permanently, and your survivor’s coverage continues at no additional cost for the rest of your life.¹¹ Both conditions must be met. A retiree who turns 70 after only 20 years of payments keeps paying until the 360th month, and one who reaches 360 payments at age 65 keeps paying until turning 70.

Reserve and Guard Members

Reserve and National Guard members become eligible when they complete 20 qualifying years of service and receive the Notification of Eligibility, commonly called the 20-year letter. You then have 90 days to choose among three options on DD Form 2656-5.¹²

Option A defers the election until you begin receiving retired pay, typically at age 60. No premiums are owed, but your survivors receive nothing if you die before then.
Option B activates coverage immediately, but if you die before age 60, annuity payments do not begin until the date you would have turned 60.
Option C activates coverage immediately, and your survivor receives payments immediately if you die at any point after the election.

If you are married and want anything other than Option C at the maximum base, your spouse must provide notarized concurrence. If DFAS does not receive your election within 90 days, you are automatically enrolled in Option C on your full retired pay.

Remarriage Rules

If a surviving spouse or former spouse remarries before age 55, the annuity stops on the first day of the month the remarriage occurs.¹³ Payments can be reinstated if that later marriage ends through death, annulment, or divorce, effective the first day of the month it terminates. A survivor who also qualifies for a separate SBP annuity through a second marriage must choose one; both cannot be collected.

Remarriage at age 55 or later has no effect. Payments continue for life.

The VA Offset Is Gone

For years, surviving spouses eligible for both SBP and VA Dependency and Indemnity Compensation had their SBP annuity reduced dollar-for-dollar by the DIC amount, which often wiped out the SBP benefit entirely. Congress eliminated that offset effective January 1, 2023. Survivors who qualify for both programs now receive the full SBP payment from DFAS and the full DIC payment from the VA with no reduction.¹⁴

The change was applied automatically; survivors did not need to submit anything. The legislation did not authorize back payments for years the offset was in effect and did not open a new enrollment window for retirees who had previously declined SBP.

Changing or Canceling Coverage

Adding a Beneficiary After Retirement

If you marry or have a child after retirement, you have one year from the marriage or birth to add the new beneficiary using DD Form 2656-6 with supporting documents.¹⁵ Missing the 12-month deadline forfeits the opportunity. Updated premium deductions begin the month after DFAS accepts the change.

Withdrawing from the Plan

Cancellation is possible only during a narrow window: the one-year period that begins on the second anniversary of your first retired pay, which is months 25 through 36 of retirement.¹⁶ If you are married, your spouse must concur in writing. After that 36-month window closes, coverage is permanent. Premiums already paid are not refunded.

A separate withdrawal path exists for retirees with a VA service-connected disability rated as totally disabling for 10 or more continuous years, or for at least 5 continuous years immediately following their last day of active duty. The beneficiary’s written consent is required.

Forms and Filing

The primary document for recording your election at retirement is DD Form 2656, “Data for Payment of Retired Personnel.”¹⁷ You use it to designate the beneficiary category, identify each beneficiary by name, Social Security number, and date of birth, and set the base amount.

If you elect less than full spouse coverage, your spouse’s signature must appear on the form, notarized or witnessed by an SBP counselor. Post-retirement changes use DD Form 2656-6; reserve component members use DD Form 2656-5. Forms go to DFAS by mail, fax, or through the askDFAS online upload tool, and must be signed, dated, and notarized where required. Gathering these documents well before your retirement date prevents delays with your first retired pay check.

1
Office of the Law Revision Counsel. 10 USC 1451 – Amount of Annuity
2
Office of the Law Revision Counsel. 10 USC 1448 – Application of Plan
3
Office of the Law Revision Counsel. 10 USC 1447 – Definitions
4
Defense Finance and Accounting Service. Special Needs Trusts
5
Defense Finance and Accounting Service. SBP Beneficiary – Former Spouse Deemed Election
6
Defense Finance and Accounting Service. Eligible Beneficiaries
7
Military Compensation and Financial Readiness. Survivor Benefit Plan – Spouse Coverage
8
Office of the Law Revision Counsel. 10 USC 1452 – Reduction in Retired Pay
9
U.S. Department of Labor. Federal Military Pensions Cost-of-Living Adjustments
10
Soldier for Life. SBP Fact Sheet
11
Defense Finance and Accounting Service. Paying for SBP
12
Defense Finance and Accounting Service. Reserve Component Survivor Benefit Plan
13
Office of the Law Revision Counsel. 10 USC 1450 – Payment of Annuity, Beneficiaries
14
Defense Finance and Accounting Service. SBP-DIC Offset Elimination News
15
Defense Finance and Accounting Service. Survivor Benefit Plan – Changing or Stopping Your Coverage
16
Office of the Law Revision Counsel. 10 USC 1448a – Election to Discontinue Participation
17
Executive Services Directorate, Washington Headquarters Services. DD Form 2656 – Data for Payment of Retired Personnel