They mention that there are many insurance salespeople who are anxious to get you to purchase their product, but the SBP has several attributes that make it tough to beat.
- SBP premiums are paid with pre-tax dollars. If you opt out of SBP, the money that would have gone to it will be subject to income tax.
- Your spouse is guaranteed lifetime income. Alternatives like life insurance may expose your survivor to the risk of missing a lump sum death benefit.
- Benefits automatically increase with inflation. A life insurance policy would have to be significantly larger to replace SBP.
- SBP is paid up after 30 years. Once you reach age 70 and have participated for 30 years, you no longer have to pay premiums.
- Social Security adjustments are being eliminated. Until recently, survivor benefits decreased at age 62, but this reduction will be completely phased out after April 1, 2008.