Still Working for Survivors After All These Years

Survivor Benefit Plan

In 1969, the National Military Family Association was founded by a handful of military wives who wanted to make sure their widowed friends were properly taken care of. Two short years later, the Survivor Benefit Plan became law, and the Association has been hard at work ever since. 

We still advocate for survivors and have advocated for several improvements to survivor benefits through the years including increases to the death gratuity and Servicemembers Group Life Insurance (SGLI), expanded health and dental coverage, and better methods of outreach to survivors about their benefits. 

We believe the benefit change that will provide the most significant long-term advantage to the financial security of all surviving families would be to end the Dependency and Indemnity Compensation (DIC) offset to the Survivor Benefit Plan (SBP). Each payment serves a different purpose.

  • The DIC is a special indemnity (compensation or insurance) payment paid by the VA to the survivor when the service member’s or retiree’s or veteran’s service causes his or her death. The amount of the payment (for survivors of deaths since 1/1/93) is $1,233.23 per month with additional payments for children. 
  • The SBP annuity, paid by DoD, reflects the longevity of the service of the military member. It is ordinarily calculated at 55 percent of retired pay. Military retirees who choose the SBP benefit pay a portion of their retired pay as a premium to ensure that their family has a guaranteed income should the retiree die. The SBP payment varies on the base pay of the service member when he retires and the level of coverage they select. Legislation passed in 2005 allows the surviving spouse and children of any service member who dies on active duty to be eligible for the SBP annuity.  

When the service member or retiree who has elected SBP dies of a service connected reason, the surviving spouse becomes eligible for both the DIC and the SPB annuity. DIC payments are not taxed but SPB payments are subject to income tax. However, the payment for SBP is OFFSET by the DIC payment rather than the survivor receiving BOTH payments. Here are some scenarios expressed in the simplest examples – as is usually the case, one size does not fit all. 

A military retiree who has enrolled in the SBP unfortunately is hit by a bus and is killed. The survivor receives the SBP annuity, but is not eligible for DIC. 

A military retiree who has enrolled in SBP, but was exposed to Agent Orange in Vietnam and has a VA disability rating dies of an Agent Orange related illness. The surviving spouse is eligible for both DIC and SBP. The amount of the DIC annuity (for 2014 it is $1,233.23) is deducted from the SBP annuity payment. If the DIC is greater than the SBP payment, the survivor receives $1233.23 per month. If the SBP is greater than the DIC, the survivor receives the $1,233.23 plus the difference between the DIC and SBP. 

A currently serving service member dies in a training accident. The surviving spouse is eligible to receive both the DIC and SBP. Depending on his/her base pay, the surviving spouse receives the $1,233.23 a month payment from DIC and the portion of the SBP payment that is not offset by the DIC payment. Remember, there are other survivor benefits for survivors of active duty deaths that are disbursed by the Department of Defense and the Department of Veterans Affairs as well, but we are focusing on SBP in this article. A complete overview of survivor benefits for currently serving military families is available on our website

Despite the offset, we believe the Survivor Benefit Plan is a good choice for military families as they approach retirement. For more official information visit the Defense Finance and Accounting Service (DFAS). Only you and your family can determine what’s best for you, whether it’s SBP, other investments or a combination of both. It’s never too early to plan!

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