Survivor Benefits for Natural Interest Persons

If you have no other eligible dependents, you can elect to use your SBP to cover an individual with whom you have what is known as a Natural Interest or Natural Insurable Interest. 

Eligible Persons

The following people who can be covered are by the SBP for Insurable Interest:

  • Any relative more closely related to you than a cousin. This includes relatives such as parents, stepparents, grandparents, grandchildren, aunts, uncles, sisters, brothers, half-sisters, half- brothers, dependent or nondependent child or stepchild; or 
  • A close business associate who would be financially affected by your death. This must be a natural person (not a company, organization, fraternity, etc.) with a financial interest in your life.

SBP Costs (Premiums)

The monthly cost is 10% of retired pay plus 5% more for each full five years the person covered is younger than the retiree. The maximum cost is 40% of retired pay.

For example, if a retiree is 45 and the person covered is 32, the age difference is 13 years, or two full five year periods. Therefore the cost percentage of retired pay would be 20%:

10 + (2 x 5) = 20 percent

If retired pay is $1,000 per month, then the monthly cost will be 20% of $1,000, or $200.

Benefit Payments

The monthly SBP payment to an insurable interest person is equal to 55% of the gross retired pay (the base amount is always the gross retired pay) less SBP cost of coverage. Payments are increased by cost-of-living adjustments (COLAs) at the same time and by the same percentage as retired pay is increased.

Continuing our example, if retired pay is $1,000 per month and the monthly cost is 20% of $1,000, or $200.

The monthly benefit will be 55% of the remaining $800 ($1,000 – $200 = $800) of retired pay.

Thus, the benefit amount will be $440 (.55 x $800 = $440) per month.

Unlike other coverage categories, you may voluntarily terminate SBP coverage (if the insured is not a former spouse) or change SBP to cover a new spouse or child.

Special Note: Public Law provides that a participant is considered “paid-up” after completing 30 years (360 payments) in the Plan. This applies to a specific category of beneficiary (i.e., spouse), at a specific base amount (i.e., full retired pay). 

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