Reserve Component Survivor Benefit Plan (RCSBP)
RC-SBP is similar to term insurance, with a few significant differences. Unlike term insurance, RC-SBP coverage never terminates due to your age. It also provides an inflation-protected annuity for the life of your spouse or other eligible beneficiary. SBP is more closely related to permanent life insurance which also never terminates due to age and provides an increasing death benefit and cash value account.
Percentage of Retirement Pay Received by the Survivors of and Active Duty or Retired Service Member:
- Provided at no cost while on active duty, but is offset by any Spouse DIC received
- Active Duty deaths are considered totally disabled, which means that retirement pay is based on 75% of base pay (subject to retirement plan rules for Final Pay, High 3 or REDUX)
- Participation is voluntary for retirees with payments made via deduction for retirement pay.
RC - SBP Participation
You will receive a package when you become retirement eligible that will require you to make a decision about RC-SBP. If you do not make an election within 90 days you will automatically be enrolled in Option C using your full retired pay as the base amount.
RC - SBP Options
- Option A: Decline participation. You will be given another opportunity to choose RC-SBP when you begin to draw retired pay.
- Option B: Deferred Annuity. Your beneficiary will receive annuity payments beginning on the anniversary of your 60th birthday.
- Option C: Immediate Annuity. Your beneficiary will receive annuity payments immediately after your death.
You are allowed to make one election from the list below.
- Spouse : SBP annuity will only be paid to the spouse and will stop at their death.
- Spouse and Child: Allows for payment to be made first to the spouse and, in their absence, to children (via a guardian).
- Child only: Annuity payments provided to children until age 18, or 22 if enrolled in school, upon which payments cease.
- Former Spouse: Choice may be required by a divorce decree. Individuals who are under a court order to cover a former spouse cannot cover a current spouse.
- Insurable Interest: May be used by those with no spouse or children. Payments must be made to a person and the cost is different from the information above. Those interested in this choice need to verify the eligibility rules and review the cost structure.
SBP annuity and premium costs are indexed to retirement pay. Both increase with COLA increases. All premiums cease upon the death of the retiree. The SBP annuity to survivors continues to increase with COLA increases.
COLA Adjusted Annually
- Choose a base amount from a minimum of $300.00 up to full retirement pay.
- SBP Payments are 55% of the base amount elected.
- A monthly benefit, not a lump sum payment.
Premiums Paid with Pre-Tax Dollars
- Spouse coverage cost is 6.5% of the base amount elected in dollars per month.
- Child coverage cost is based on the ages of the retiree and the youngest child and the base amount chosen.
- All premiums cease upon the death of the retiree.
- Begin paying when retired pay starts.
RC-SBP Cost (Applicable if Retiree dies prior to receiving retired pay)
Coverage cost is made up of three components: The SBP cost, Reserve Component cost and Survivor's cost.
- The SBP cost is 6.5% of the base amount you elect.
- The Reserve Component cost*.
- The Survivor’s cost is .01% of the base amount you elect.
- If you elect Option A and then elect to participate at age 60, your retired pay will be reduced by SBP cost.
- If you elect Option B, when you begin collecting retired pay it will be reduced by the SBP cost.
- If you elect Option C, when you begin collecting retired pay it will be reduced by the SBP cost and the Reserve Component cost.
- If you elect Option B or C and die before you reach age 60, your beneficiary will receive annuity payments based on the base amount you elected minus the Survivor’s cost of 0.01%. Spouse only or Spouse and Child options cost the same prior to age 60.
- The Reserve Component cost is based on your monthly retired pay, as well as your age and the age(s) of your annuitant(s) at the time you make the election. Refer to The Office of the Department of Defense Actuary tables to calculate RCSBP premiums.
RC-SBP Plan Details
- Spouse concurrence is required if any base amount less than full retired/retainer pay is elected and/or spouse coverage is not elected.
- Participation decision is revocable between the 2nd and 3rd year of receiving retirement/retainer pay with spouse concurrence.
- Participation is paid up after completion of 30 years of payment.
- A spouse receiving and SBP annuity become ineligible if remarried prior to age 55. Benefits can resume at the death of the new spouse of if the marriage ends in divorce.
- Participants cease paying premiums when:
- Their children are no longer eligible, which occurs on their 18th birthday (or to age 22 if a student); however, a disabled child is eligible for life.
- They lose their spouse through death or divorce.
- An unmarried, divorced or widow/widower retiree can elect Survivor Benefit Plan coverage for a new spouse. This coverage becomes effective one year after the marriage.
- Service members without children at the time of retirement may elect coverage for children within 1 year after their birth or adoption.
Declining Participation in RC-SBP
If you choose not to participate in RC-SBP you will need to review your life insurance coverage, savings and investments to ensure that your loved ones will have the financial resources they need to take care of themselves if you die.
Understanding Your Options
Navy Mutual Aid Association has been recognized by the Department of Defense as a resource for counseling and information on the Survivor Benefit Plan. If you need help making your decision – or what to compare your options – contact us to get the expert guidance and assistance you need.