crondanet5 wrote:Nav, how many years has your mother received that benefit? Was it worth the money your dad paid into SBP?
6 years as of October.
As for your follow-on "trick" question, who's NOT happy to get free money? Whether or not she's "happy" to be getting $415/month has no bearing on the SBP qualifying as a good option in 2016.
We've had this conversation before but you've never really told me why YOU think the SBP is the Bee's Knee's. Maybe it was a good option in 1978; I don't think it is now. A $500K life-insurance policy for $110/month and an immediate non-taxable payout upon death, or, $400 month into the SBP for 30 years for a a $3000/month taxable payback, month-to-month, until your spouse dies???
Oh yeah, almost forgot, with the SBP, if your widow remarries before age 55 she loses the SBP annuity. So I retire at 50, die at 52 and she remarries when she's 50...no SBP for her. That's not to say she can't just date someone until she's 55, and then remarry.
Can't forget this tasty tidbit either: You pay into SBP for 20 years yet, BY LAW, if your spouse BENEFICIARY dies before you do, you ain't getting that money back. In my hypothetical case, that would be about $85K down the drain. SBP doesn't pay out because your sole beneficiary died <<< they made their money. You, on the other hand, have lost your spouse AND your money <<< Sounds like a country song.
All insurance is a gamble and the SBP is no different. You get a 20-yr life insurance policy and the insurance company is rolling the dice that you'll outlive the 20-yr coverage. They make money - you make it 20 years. I've given USAA over $30,000 in auto insurance premiums over the past 25 years and have never filed a claim...it's a gamble. Same with SBP: They want you to live 30 years to pay up the exorbitant premiums because the longer you live, the less they have to pay out. So just die prematurely, after your wife is 55, and stick it to the man
The only real advantages I see to the SBP is the fact that it cannot be denied, it cannot be cancelled because of your health, and the premiums will always remain at the percentage of the base retirement pay you selected upon retirement. SBP premiums are tied to COLA. If your retirement pay goes up, so does your SBP premium; however, it's a pre-tax premium payment that forever remains at the original election. Also lowers your taxable income. Conversely, if you've got medical issues, or you use tobacco products, you're going to pay out the yang for private life insurance. The premiums go up with age and are VERY expensive and somewhat cost prohibitive if you wish to keep the policy very late into your senior years.