From The Mailbag: Stopping SBP Payments

The military’s Survivor Benefit Plan (SBP) has a few unique terms that have to be considered when deciding whether SBP is right for your family’s overall financial plan. One important issue is that electing SBP is basically an irrevocable choice.

Dear Kate,

I’m one of those divorced military retirees that is paying into the SBP for an ex-wife’s benefit. I would like dearly to just stop payments on the plan, but I’m locked in forever. I guess my question would be who do I go to (besides my Senator and congressman – who were no help) to ask why can’t I stop an allotment of my own money? Even my ex-wife agrees to stopping it. I’d just like an answer besides “it’s the law”?

Doug

I think this is one of the most unusual parts of SBP – you can’t get out of it once you get in. I’m not sure the logic behind this rule, but it is part of the deal and it isn’t a new change.

Dear Doug,

I hear your frustration. Unfortunately, “the law” is part of the contract you signed when you selected SBP coverage. If you passed the window for cancellation, you agreed to remain within the program. There are only three ways I can think that your SBP participation could be cancelled: if your former spouse remarries before age 55, or if your former spouse passes away.

It sounds like you are not required by your divorce decree to provide SBP coverage to your former spouse. If that is true, you may transfer that coverage to a new spouse if you remarry.

Fortunately, you won’t be paying premiums forever. SBP premiums are paid up after you both attain the age of 70 and pay 360 monthly premiums. I know someone who has been “paid up” since the paid-up provision took effect in 2008.

I hope that answers your question, even if it isn’t the answer you’re hoping to hear.

Kate

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.