Military Survivor Benefits Explained (SBP and DIC)

Understanding Military Survivor Benefits

Survivor benefits provide financial security for military families after a service member’s death. The two primary programs, the Survivor Benefit Plan (SBP) and Dependency and Indemnity Compensation (DIC), work differently and serve different purposes. Understanding both helps families plan effectively and maximize their entitled benefits.

Survivor Benefit Plan (SBP) Basics

SBP is a Department of Defense program that provides a monthly annuity to eligible survivors of military retirees. It functions like an insurance policy, with premiums deducted from retired pay during the retiree’s lifetime.

Key SBP features:

• Coverage amount: Up to 55% of retired pay
• Premium cost: 6.5% of the covered amount
• Automatic enrollment: Retirees are automatically enrolled at maximum coverage unless they elect otherwise (spouse must consent to reduced coverage)
• COLA protection: Benefits increase annually with cost-of-living adjustments
• Premium cap: After 360 monthly payments or reaching age 70 (whichever is later), premiums stop but coverage continues

For example, a retiree receiving $3,000 monthly who elects full SBP coverage would pay $195 monthly ($3,000 x 6.5%). Upon the retiree’s death, the surviving spouse would receive $1,650 monthly ($3,000 x 55%).

Dependency and Indemnity Compensation (DIC)

DIC is a VA benefit paid to surviving spouses, children, or parents of service members who died on active duty, from service-connected conditions, or while receiving VA compensation rated totally disabling for 10 or more years prior to death.

2025 DIC rates:

• Basic DIC rate: $1,612.75 per month for surviving spouses
• Additional for each dependent child: $382.29 per month
• Aid and Attendance addition: $400.70 per month if needed
• Housebound addition: $186.36 per month
• 8-year provision: Additional $330.54 if married 8+ years and veteran was 100% disabled at death

SBP-DIC Offset Changes

Historically, surviving spouses who qualified for both SBP and DIC had their SBP reduced dollar-for-dollar by their DIC amount, known as the “widow’s tax.” The National Defense Authorization Act for FY2020 phased out this offset over three years.

As of January 1, 2023: The SBP-DIC offset is fully eliminated. Surviving spouses now receive both full SBP and full DIC payments without reduction. A surviving spouse entitled to $1,650 in SBP and $1,612.75 in DIC now receives $3,262.75 monthly rather than just the DIC amount.

How to Enroll in SBP

SBP enrollment typically occurs at retirement:

• At retirement: Complete DD Form 2656 during retirement processing
• Automatic enrollment: If no election is made, you’re enrolled at maximum spouse coverage (spouse must sign if electing less)
• Open enrollment windows: Occasionally offered for those who previously declined or reduced coverage
• Reserve Component SBP (RCSBP): Gray-area retirees can enroll when notified of eligibility for retired pay at age 60

Important: Once enrolled in SBP, you cannot cancel coverage except under specific circumstances (such as spouse’s death or divorce without remarriage).

DIC Eligibility Requirements

To qualify for DIC, the surviving spouse must:

• Have been married to the veteran for at least one year (or have a child with the veteran)
• Have lived with the veteran continuously until death (or was separated due to misconduct of the veteran)
• Not have remarried (remarriage after age 57 doesn’t affect eligibility)

The veteran must have:

• Died while on active duty, or
• Died from a service-connected condition, or
• Been rated 100% disabled for 10+ continuous years before death, or
• Been rated 100% disabled from date of discharge for 5+ years, or
• Been a former POW rated 100% disabled for 1+ years

Comparing SBP and DIC Benefits

SBP advantages:

• Based on retired pay (can exceed DIC amounts for high-ranking retirees)
• Can name child-only or former spouse as beneficiary
• Coverage transfers to children if spouse remarries before age 55

DIC advantages:

• No premiums; fully funded by VA
• Tax-free (SBP is taxable income)
• Available even if service member dies before retirement
• Includes additional allowances for children, aid and attendance

Planning Your Family’s Coverage

For comprehensive survivor protection, consider both programs. Since the SBP-DIC offset is eliminated, families can now maximize benefits by:

• Enrolling in SBP at maximum coverage at retirement
• Ensuring service-connected conditions are properly documented for potential DIC eligibility
• Reviewing beneficiary designations regularly
• Understanding how remarriage affects each benefit differently

Consult with a military financial counselor or Veterans Service Organization to evaluate your specific situation and ensure your family receives all entitled survivor benefits.