What If Your Military Spouse Dies?

What If Your Military Spouse Dies?

If you use social media, you’ve probably seen more than one charitable account set up for a family of a service member who has died, whether in combat, a domestic incident, or even just an accident.  These requests for charitable donations have always confused me, because my experience and understanding of the military benefits system leads me to believe that most families will not have significant financial challenges if their military spouse dies while on active duty.  It’s a touchy subject, though, and while I have written about it here before,  I’ve never wanted to ask too many questions because it seems rude.

Last weekend, however, I finally braved the censure of the world of Facebook to ask what sort of needs the family did not anticipate to have covered by their military and Social Security benefits.  The replies contained some interesting perspectives, and I wanted to share them with you.  I am not adding any of my own opinions or facts to these comments, just providing them for your consideration.

Here are some issues that you may want to consider when organizing your financial life and evaluating your need for life insurance, other savings, or other investment products.  While most people would rather not think about these subjects, it is important that you are prepared and understand what happens if your military spouse dies.

Amount of Survivor Benefit Plan benefits

Survivor Benefit Plan (SBP) benefits are based upon the income of the service member.  For younger and more junior folks, that income isn’t very much, so amount provided by SBP is also small.  For service members who have served less than 20 years, SBP pays 55% of 75% of base pay.  For service members who are retirement eligible, SBP pays 55% of base pay.

For the survivor of an E-1 with less than two years service, it would be just $638 per month to a widow or widower.  For the survivor of an E-5 with over 8 years of service, it would be $1218 per month (in 2015 rates).  For the survivor of an E-6 with 15 years of service, SBP benefits would be $1496 per month.  For the survivor of an E-8 with 26 years of service, SBP benefits would be $3075.

SBP-DIC Offset

Surviving families of fallen military members are also eligible for Dependency and Indemnification Compensation (DIC) payments from the Department of Veterans Affairs (VA).  However, a few people don’t understand how the DIC-SBP offset works.  In short, SBP benefits are reduced dollar-for-dollar by DIC benefits.   In some cases, the DIC benefit exceeds the SBP payment and therefore no SBP payment is received.  The 2015 DIC rates are $1,254 for the widow or widower, and $310 for each dependent child under the age of 18.

Jobs, Job Skills, and Child Care Costs

Many comments pointed out that surviving spouses often feel the need to return to work, that they often have rusty job skills, and that child care will eat up a huge amount of their income.

Lack of Credit

According to the replies I received, many military spouses don’t have credit in their own name, which can be a barrier to moving forward financially.  This concern can be eliminated by maintaining separate credit accounts in your marriage, and being conscious of including both spouses in large credit events like mortgages.

Counseling

Several comments mentioned the amount of therapy or counseling that many families require when they have lost a loved one, and that the benefits provided by Tricare and Military One Source do not adequately cover the costs of these sessions.

Life Insurance

If a surviving spouse is also a parent, the need for adequate life insurance increases dramatically.  Many surviving spouses are surprised by the cost of life insurance, especially if they are older when first obtaining coverage.

I truly fear that people think I am being harsh or rude when I ask questions, but I always want to learn more, and the information I learn helps me, my readers, and the people with whom I work individually.  If you would like to add any comments or questions, please do.  More conversation always helps us all.

 

 

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.
  • Theresa

    But don’t the survivors of active duty members start off with the 100k death benefit and (hopefully) 400k in SGLI? That should be pretty decent seed money in addition to the monthly income until the surviving spouse can get settled in a job.

    • Kate

      Theresa, I agree. In addition, survivors receive 12 months of BAH and 36 months of Tricare Active Duty coverage before transitioning to Tricare Retiree. Also, surviving families with children are eligible for Social Security benefits.

      Surviving spouses and children are also eligible for the Fry Scholarship, which provides the same benefits as the Post 9/11 GI Bill (but not Yellow Ribbon benefits.)

      I believe that the military survivor benefits are pretty darn comprehensive and generous, but I have been told that I don’t understand and that it isn’t enough.

  • 4M

    Kate,

    Is the SBP 55% of 75% of base? Or did it raise to 55% of 100% of base along with the maximum retirement multiplier?

    As far as the GoFundMe campaigns, well I’ll have to grab the back side of an envelope and my favorite pen to be sure, but I don’t think the sum of these benefits would approximate the earnings of a servicemember’s three basic pays over 20 years, let alone any special pays.

    So in addition to providing an outlet for people to grieve, I do think the GoFundMe accounts help shore up a gap over twenty years of active service, and even into retirement.

    4M

    • Kate

      4M, you are absolutely correct: if the service member has served less than 20 years, it is 55% of 75%. I have corrected the figures.

      I can’t imagine that anyone would expect the survivor benefits to replace a working service member’s pay. At least, that’s not the way I look at it. SBP/DIC, plus social security, are designed to provide a basic level of support for survivors. If the family decides that more support is necessary, then life insurance is the tool to make that happen.

      • Theresa

        I would plan to work if something happened to my husband (death or disability), although there would certainly be a time lag to grieve, move, find a job, etc. We consider the (not inconsiderable) cost of maintaining my professional licenses and certifications to be a form of insurance even though I’m currently home with the kids.

  • 4M

    Kate,

    Even adding in the SGLI there will be a funding gap, and remember that not all of our young invincibles shell out for even that minimal coverage.

    So when the unthinkable happens GoFundMe could be used to bridge the gap no one expected because they thought SBP/DIC/SS/SGLI were enough.

    SGLI is more than enough for a single servicemember, but once you throw a family into the mix, another policy is going to be needed, but outside of USAA I’ve never heard this get briefed in a military setting.

    • Kate

      I must have a really unique group of acquaintances, because nearly everyone I know has significant life insurance on top of their SGLI coverage. Even if they didn’t take it initially, the addition of a child or a mortgage usually prompted the purchase of additional coverage. While I think they’ve gone overboard, I know many people who have coverage in the million dollar range.

      I also know people who don’t have any life insurance, both military and civilian. In fact, I think my civilian friends are more likely to be uninsured than my military friends.

      It is always interesting to me to hear the perspectives of other people. I learn something every single time. So keep sharing!

      • 4M

        Kate,

        Unique for sure.

        I’m not sure if it is still this way, or if it’s been this way for long, but a year ago when I called USAA to get a policy, $1MM was reserved for O4 and above (with a few career exceptions).

        Surely you’ve heard of Lt.Col. Landon Jones, a rotary pilot we lost at sea. Despite the risks of his job he opted out of SGLI multiple times. A tragic story.

        When I think of the families who need insurance the most I think of those in their first term be they officer or enlisted. They are going to have the youngest children and their SBP would be so very little. But it’s these families that might not think they can afford another $240-$500 a year on top of the SGLI.

        And so when the worst comes, GoFundMe is there.

        Yes we would be 100% better off if everyone got some more insurance, because GoFundMe is fickle, some families can get so much, others nothing, but I haven’t seen a push for coverage (and although I talk money with all my friends, I haven’t talked insurance, so I’ll give that a swing this week).

        4M

        • Kate

          I am very familiar with LCDR Jones’ story, and I do feel for his wife and family. However, the survivor’s benefits for an O-4 with 12 years of service are pretty darn good. According to the Navy Mutual Aid Association’s excellent SEABAAG calculator, for a family with a spouse and two children, it’s in the range of $7,000 a month when Social Security benefits are included, with a significant chunk of that tax-free. Obviously, the children’s benefits do end as the children become adults. These are cost-of-living adjusted benefits, and can be lifetime benefits for the spouse depending on how the crazy remarriage rules work in their particular case.

          As a stay-at-home parent with four kids, I’ve kept pretty close tabs on my husband’s survivor benefits over the last couple of decades. At no point did I think they were inadequate. We do have additional life insurance to allow breathing room and to build a large emergency fund if either of us were to become a single parent, but I would be able to support my family solely on the military and federal benefits.

          I appreciate the conversation, as I think there is always room to learn more.

          • 4M

            Kate,

            Hope my tone isn’t coming off as critiquing, I’m notoriously bad at tone in digital formats.

            I have no doubt those of us who read here often have a handle on our finances. Just like those who read corvette blogs are certain to know a lot about corvettes. But there are thousands of military families who might not have adequate protection.

            And the longer someone has been in, the more they have in their TSP/IRA’s, the more fleshed out their emergency fund is, the larger the difference between what they make and what they have to spend on the basics, the larger their SBP, and the more likely they stumbled into a life insurance pitch.

            But of the second 1,000 servicemembers who gave their lives in the wars of the past decade, the average age was 26. For the 90% who were enlisted that’ll put them roughly at E5, not a whole lot of wiggle room in the budget for an E5 with a family, and as we’ve seen the SBP for an E5 @ eight years of service isn’t great.

            Hopefully the push for financial education that comes with the new retirement plans boosts all our troops financial education exposure and we can wash our hands of the GoFundMe’s and You Caring’s, but as of now they are a stop gap for the guys we didn’t get to. Sure as with any program there are people who utilize it and don’t actually need it, but we shouldn’t stop building roads just because some people speed on them.

            Anyways, it’s time to hop off the bike and go pick up the kids from the gym childcare, I appericate your writing and I don’t think there’s been an article yet where I haven’t learned something.

            -4M

      • Theresa

        My husband and I both have insurance coverage approaching the million range, with the stated goal of paying for extra childcare and sending them through college (we have 3 kids 5 and under and may still have more children, but didn’t want to have to add extra coverage later when we were older and it was more expensive), so it doesn’t seem excessive to us. ($200K+ for college for ea kid, even with other savings, adds up fast. We estimate the transferred GI Bill will pay for about 1/2 of one kid’s education.) If I recall, each 100K in coverage was on the order of $100/yr, which seemed like a totally reasonable fee for letting me sleep at night.

        I think people are sadly mistaken if they expect any kind of insurance or death benefit to replace a lifetime of potential earnings for a young professional, however, but it seems like the military benefits would provide a nice cushion and a few years of time to get squared away.

  • Thelma Ryan

    I don’t believe I am receiving appropriate DIC payments from the VA and was never afforded the opportunity to apply for additional benefits following my husbands death in 2012. He was active duty in two wars, Korea and Vietnam. Can anyone help by identifying who and which agency I may contact. Veterans Affairs were less than helpful totally ignoring me after my inquiry. Thank you.

    • Carl

      I checked this out yesterday with a VA rep. They told me that my death would have to be caused by one of the disabilities he was eligible for. You need to know the disabilities he was awarded. Still, you could try to apply for survivors pension. It would be equal to what he was drawing. Also, you are eligible for his old age pension when you turn 60 years. They may even back date your start date, which would mean a healthy lump sum check and monthly check thereafter. You can look on the VA web site and can download the survivors pension form.

  • Kate

    Thelma, I would need a lot more information to answer your questions. If your husband was a veteran, but not a military retiree, you may be eligible for DIC or a survivors pension. DIC eligibility is based upon certain medical criteria, what you can see here:
    http://benefits.va.gov/COMPENSATION/types-depende

    Survivors pensions are income-based. You can see the details here:
    http://www.benefits.va.gov/pension/spousepen.asp

    The only people you can contact are the VA. While they are often slow, they don’t typically ignore people unless information has been lost. If you need help working with the VA, you may benefit from talking to a Veteran Service Officer. VSOs work for the major veterans organizations (American Legion, Veterans of Foreign Wars, etc) and also for many county or state governments. There is no charge for their help and they often have knowledge that comes with the experience of working with the VA regularly.

    • Debbie

      I am a casualty counselor and we help the active duty and retiree families with everything that could possible be applied for through the military. If the military member died while on active duty, the military conducts a line-of-duty (LOD) determination. This is to be sure that the member was not doing anything illegal or against military policy. The Death Gratuity of $100,000 us paid as soon as the deposit can be made, same for the housing allowance, and unpaid pay, regardless of LOD outcome. All other benefits are held until LOD is completed. Sad to say that I have seen benefits not paid.

      If the member separated from service, (did not retire), there are no benefits paid unless the death occurred with 120 days after separation, then it is treated as an active duty death.

      In retirement the survivors could possibly receive unpaid pay, SBP, DIC and VGLI.

      Basically, what you have stated it true for the most part. The benefits are paid according to how and who the member designated.