2022 AFBA Financial Planning Guide

died from injury or illness incurred or aggravated in the line of duty during inactive duty training. While SBP participation for a reserve retiree begins when the member receives non- regular retirement, RCSBP participation allows the member’s qualified dependents to receive an annuity if the member dies before reaching non-regular retirement. Read more on the RCSBP in Chapter 2. 5–3. WHO CAN BE BENEFICIARIES? Beneficiaries may include a participating member’s spouse; spouse and child; child only; former spouse; former spouse and child; or when there is no spouse or child, an election may be made to select a person with an insurable interest in the retiree. An individual with an insurable interest is one who has a bona fide financial interest in the retiree’s continued life — e.g., sister, brother, parent, grandchild, or business partner. If the insurable interest beneficiary is related more closely than a cousin, no proof of financial interest is required. If spouse and child SBP coverage is elected, all eligible children are covered. If former spouse and child SBP is elected, only the children of the former marriage and the former spouse are covered. 5–4. HOW MUCH DOES THE BENEFICIARY RECEIVE? The amount of the survivor’s annuity is 55% of the base level of coverage selected by the member. The SBP premiums and benefits depend on what is referred to as the “base amount.” The base amount is the dollar amount of coverage that is elected. The base amount can be any amount ranging from $300 to the full amount of the member’s retired pay. In the case of a member who retires under REDUX, the designated amount must be the retired pay the member would have received under the High-36 retirement system. For a BRS lump sum retirement election, the designated amount must be the amount of retired pay the member would have received without the lump sum retirement election. Full coverage means that the full retired pay is the base amount. The table on the right illustrates the monthly beneficiary annuity for various base amounts of retired pay. 5–5. HOW MUCH DOES IT COST? All active duty members receive SBP coverage at no cost. The monthly cost for retirees to participate in the SBP program depends upon the dollar level at which the member elects to participate; the beneficiaries designated to receive SBP benefits; and whether the member’s cost is computed under the old plan or the revised plan which was implemented in March 1990. Once in effect, the retiree’s monthly cost is subject to increases (but there are corresponding increases in benefits

SBP Benefits & Costs — Spouse Only

Retired Pay Base Amount

Monthly Annuity

Monthly Cost Under Old Plan

Monthly Cost Under New Plan



$ 7.50* 22.98* 31.08* 51.08* 71.08* 127.98



505 550 660 770

59.74 65.00 78.00 91.00

1,000 1,200 1,400 1,969 2,000 2,200 2,400 2,600 3,000 3,400 3,800 4,200 4,600 5,000 6,000 7,000

1,083 1,100 1,210 1,320 1,430 1,650 1,870 2,090 2,310 2,530 2,750 3,300 3,850

127.98 130.00 143.00 156.00 169.00 195.00 221.00 247.00 273.00 299.00 325.00 390.00 455.00

Participation cost at a base amount of $1,969 is the same under both the old and new plans. If a member participates at a retired base amount above $1,969, the monthly premium is calculated using the new plan which provides a lower cost.

*The cost under the “old plan” is lower than the cost under the “new plan” therefore the “old plan” cost will be the premium paid.

paid) based on retired pay increases resulting from changes in the Consumer Price Index (CPI). Cost Under the Old Plan. For members who retired prior to October 1,1985, the monthly cost is 2.5% of the $300 minimum level plus 10% of any amount over $300. For personnel who retired after October 1, 1985, the minimum level of $300 was retained but a new “threshold level” was introduced. The threshold amount changes annually based upon increases in active duty pay rates. The FY 2022 threshold level is $919. The monthly cost at the threshold level and above is 2.5% of the threshold amount plus 10% of any amount over the threshold. Cost Under the New Plan. In March 1990, SBP cost computations were changed to a single rate of 6.5% of the base amount selected by the retiree. This change provided a substantial cost reduction for all current and future retirees who enroll above the minimal levels of participation.


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