A viable alternative to the Military Survivors Benefit Plan (SBP).

Abstract

The costs and benefits of the Military Survivors Benefit Plan (SBP) were studied. The present value of the expected lifetime costs and benefits were estimated for the SBP for various initial base amounts, rates of inflation, and retirement ages. It was found that the ratio of costs to benefits of the SBP increases as the base amount increases above the minimum allowable base. A life insurance plan yielding a lifetime stream of benefits comparable to the SBP was developed and the lifetime costs and benefits were estimated using the same rate of discount, initial base amounts, rates of inflation, and retirement ages as were utilized for the SBP study. The ratio of costs to benefits of the SBP and the life insurance plan were compared and conclusions regarding the advantages and disadvantages of each plan were drawn from the emperical results.