I am a divorced service member who will retire from the military next year. As part of my divorce decree, I do not have an Survivor Benefit Plan (SBP) obligation. However, I do have to maintain a $100,000 insurance policy (payable to my ex spouse). While on active duty, I designated my ex as a partial beneficiary on my SGLI. However, I may have to take out a whole life ( or similar ) policy to maintain this insurance obligation after my retirement from the military. A such, I am looking for the best options available.
Insurance Alternatives to Survivor Benefit Plan (SBP)
byu/david_clinton2 inMilitaryFinance
Posted by david_clinton2
2 Comments
A $100k term life insurance policy is dirt cheap. I’d recommend getting $200k – the first $100k is to pay for your funeral expenses, the other $100k is for your spouse.
Another option to pursue – rather than insurance, could you simply agree to fund a trust or escrow with $100k?
Last thing you could look into is that the SBP has options to elect partial coverage. You could elect coverage of an amount that would pay out $100k of pension benefits over something like 10 years if the ex would agree to that.
How long do you have to maintain the coverage for? If forever, don’t get term life.
Universal life with no frills is likely the cheapest option for if you have to maintain permanent insurance on her forever.
Getting term on her now is a recipe for disaster if she outlives the policy – you’d have to get a new term on an aged woman when you’re potentially going to not be working (if you retire).
If it isn’t forever, just get the cheapest term set to expire the exact day you no longer need her insured