SBP?
08-01-2014, 09:40 AM
#11
Gets Weekends Off
Joined APC: Oct 2012
Position: 737
Posts: 1,061
Originally Posted by e6bpilot
Also a good point and very true.
My perspective is that if I haven't saved enough money by then to support my wife through her golden years then I have failed. I know, I know, this is a turbulent industry and I am playing with fire, but I would rather put that 225 into a 401K and watch it grow. I am not going to do SBP and term life because it would be a foolish use of my money that I could be saving for retirement. I have to choose one or the other and I am going to stick with term life. It is a 30 year term, which carries me out to 71. That should be long after I quit flying and I plan on squirreling away my pennies, especially after the kids are grown and gone, which also should coincide with my prime earning years.
My perspective is that if I haven't saved enough money by then to support my wife through her golden years then I have failed. I know, I know, this is a turbulent industry and I am playing with fire, but I would rather put that 225 into a 401K and watch it grow. I am not going to do SBP and term life because it would be a foolish use of my money that I could be saving for retirement. I have to choose one or the other and I am going to stick with term life. It is a 30 year term, which carries me out to 71. That should be long after I quit flying and I plan on squirreling away my pennies, especially after the kids are grown and gone, which also should coincide with my prime earning years.
08-01-2014, 10:29 AM
#12
Gets Weekends Off
Joined APC: Oct 2012
Position: 737
Posts: 1,061
Scenario on the 30 year term: You die the day after the term expires. You've invested $225/month in a 401k at 7% annually during that time. It's valued at $255,000. The biggest benefit of SBP IMO is that it is inflation protected so it grows at 2.5%'ish/year. $255K in 2044 will be worth a lot less than it is today.
Scenario 2 on 30 year term: You die the day before the term expires. You've invested $225/month again. Your spouse then has the $255K and the value of the term policy ($500k??).
So again, which is better? I'll tell you after you die.
Scenario 2 on 30 year term: You die the day before the term expires. You've invested $225/month again. Your spouse then has the $255K and the value of the term policy ($500k??).
So again, which is better? I'll tell you after you die.
08-01-2014, 11:26 AM
#14
Gets Weekends Off
Joined APC: Dec 2007
Position: Retired
Posts: 404
The first thing you have to understand is that you are paying a monthly "fee" to protect income for your surviving spouse. It is not an investment or a fund for your retirement if you should live. You want to get the maximum protection for the smallest fee. Secondly, after 20 or 30 years will your surviving spouse need your military retirement to live on? Once you get that big airline job and start banking part of your retirement check, would that fund be all that would be needed to replace the retirement check? Third, when you are figuring this out, remember to use after tax dollars. Life insurance is paid for with after tax dollars so the benefit is not taxable. And finally, a quality civilian insurance company is a lot less likely to make any major changes to a term policy. With the U.S. Government all bets are off. They could make changes to your SBP after 10 or 15 years and you may not be able to get a term policy due to your age or health. Everyone's needs will vary. Do what works for you.
08-01-2014, 02:30 PM
#15
Gets Weekends Off
Joined APC: Oct 2006
Position: FedEx
Posts: 666
SBP is a good deal if private life insurance is too expensive due to some kind of pre-existing condition or family history. I didn't intend to support my wife indefinitely if I died, I figured at some point she could work or re-marry. I guess that makes me a tool of the day. What I did want to do was provide for my kids and their education so when we opted out of the SBP I bought term life insurance to make sure they (and my wife) would have enough money to live comfortably until they were out of college at least. Its definitely a private decision that you and your wife need to make based on your personal situation and how "lucky" you feel about living a good, long life. For us, term life insurance was the cheaper option.
Thank you for your service and good luck in the "real world."
FJ
Thank you for your service and good luck in the "real world."
FJ
08-02-2014, 04:36 AM
#16
Otto
Thread Starter
Joined APC: Jul 2013
Position: Turkish Pile Driver
Posts: 1,806
Guys, thanks for all the replies, good food for thought. I'm glad to see a lot of you putting words to abstract thoughts I was having. Obviously if I knew when we'd both die this would be pretty easy. I think the bottom line is this is one decision I should just let my wife make since she's the one who will have to live with the consequences.
08-02-2014, 11:29 AM
#18
Gets Weekends Off
Joined APC: Dec 2007
Position: Retired
Posts: 404
Originally Posted by gr8vu
Few things to think about:
I bought a 30 year 800K for 130 a month last year that is good until I am 75 (took several weeks to send in physical forms, get blood work, etc to qualify for the best rate--and you may need to do it before you have to say "yes I am an airline pilot". I also have a USAA one for 20 year (250K) for 30 a month--I bought the USAA one because of the riders (you can increase it when you retire with guaranteed insurability--doesn't matter that I am an airline pilot). To keep these in force I will pay over 57k (set cost) over the next 30 years. But over that time period they will definitely lose more than half their value in buying power.
SBP is unique in that payouts increase based on cost of living each year. Today if I died it would pay 2500 per month or 30k a year and increase each year. In today's dollars I will pay over a 100k to have SBP coverage.
The hard part is figuring out when you are going to die and how inflation is going to increase your SBP costs or de-value your payout of any other life insurance product. The SBP payout will theoretically keep pace with inflation and could pay double (5000 per month) in 20 years at around 3% inflation.
I figured I would need at least 2 million of life insurance to match SBP's payout over the next 20 years. I priced out whole life and couldn't find anything reasonable compared to the term insurance numbers discussed above.
I couldn't find any inflation based insurance products (that were remotely understandable to the average human) on the market most likely because the risk to do so is very expensive and therefore not affordable.
If you're retiring, you may want to sign up for SBP (you can always cancel) and see if you can qualify for the best term rates before you cut ties with SBP. Then you can re-assess your health and insurance needs in 1-3 years and see what risks you are willing to take based on your net worth, health, and family situation. It's kind of like going to Vegas and making a bet--when you win you always wish you had bet more.
I bought a 30 year 800K for 130 a month last year that is good until I am 75 (took several weeks to send in physical forms, get blood work, etc to qualify for the best rate--and you may need to do it before you have to say "yes I am an airline pilot". I also have a USAA one for 20 year (250K) for 30 a month--I bought the USAA one because of the riders (you can increase it when you retire with guaranteed insurability--doesn't matter that I am an airline pilot). To keep these in force I will pay over 57k (set cost) over the next 30 years. But over that time period they will definitely lose more than half their value in buying power.
SBP is unique in that payouts increase based on cost of living each year. Today if I died it would pay 2500 per month or 30k a year and increase each year. In today's dollars I will pay over a 100k to have SBP coverage.
The hard part is figuring out when you are going to die and how inflation is going to increase your SBP costs or de-value your payout of any other life insurance product. The SBP payout will theoretically keep pace with inflation and could pay double (5000 per month) in 20 years at around 3% inflation.
I figured I would need at least 2 million of life insurance to match SBP's payout over the next 20 years. I priced out whole life and couldn't find anything reasonable compared to the term insurance numbers discussed above.
I couldn't find any inflation based insurance products (that were remotely understandable to the average human) on the market most likely because the risk to do so is very expensive and therefore not affordable.
If you're retiring, you may want to sign up for SBP (you can always cancel) and see if you can qualify for the best term rates before you cut ties with SBP. Then you can re-assess your health and insurance needs in 1-3 years and see what risks you are willing to take based on your net worth, health, and family situation. It's kind of like going to Vegas and making a bet--when you win you always wish you had bet more.
08-02-2014, 02:24 PM
#20
Banned
Joined APC: Dec 2009
Position: Narrow/Left Wide/Right
Posts: 3,655
Originally Posted by gr8vu
Few things to think about:
I bought a 30 year 800K for 130 a month last year that is good until I am 75 (took several weeks to send in physical forms, get blood work, etc to qualify for the best rate--and you may need to do it before you have to say "yes I am an airline pilot". I also have a USAA one for 20 year (250K) for 30 a month--I bought the USAA one because of the riders (you can increase it when you retire with guaranteed insurability--doesn't matter that I am an airline pilot). To keep these in force I will pay over 57k (set cost) over the next 30 years. But over that time period they will definitely lose more than half their value in buying power.
SBP is unique in that payouts increase based on cost of living each year. Today if I died it would pay 2500 per month or 30k a year and increase each year. In today's dollars I will pay over a 100k to have SBP coverage.
The hard part is figuring out when you are going to die and how inflation is going to increase your SBP costs or de-value your payout of any other life insurance product. The SBP payout will theoretically keep pace with inflation and could pay double (5000 per month) in 20 years at around 3% inflation.
I figured I would need at least 2 million of life insurance to match SBP's payout over the next 20 years. I priced out whole life and couldn't find anything reasonable compared to the term insurance numbers discussed above.
I couldn't find any inflation based insurance products (that were remotely understandable to the average human) on the market most likely because the risk to do so is very expensive and therefore not affordable.
If you're retiring, you may want to sign up for SBP (you can always cancel) and see if you can qualify for the best term rates before you cut ties with SBP. Then you can re-assess your health and insurance needs in 1-3 years and see what risks you are willing to take based on your net worth, health, and family situation. It's kind of like going to Vegas and making a bet--when you win you always wish you had bet more.
I bought a 30 year 800K for 130 a month last year that is good until I am 75 (took several weeks to send in physical forms, get blood work, etc to qualify for the best rate--and you may need to do it before you have to say "yes I am an airline pilot". I also have a USAA one for 20 year (250K) for 30 a month--I bought the USAA one because of the riders (you can increase it when you retire with guaranteed insurability--doesn't matter that I am an airline pilot). To keep these in force I will pay over 57k (set cost) over the next 30 years. But over that time period they will definitely lose more than half their value in buying power.
SBP is unique in that payouts increase based on cost of living each year. Today if I died it would pay 2500 per month or 30k a year and increase each year. In today's dollars I will pay over a 100k to have SBP coverage.
The hard part is figuring out when you are going to die and how inflation is going to increase your SBP costs or de-value your payout of any other life insurance product. The SBP payout will theoretically keep pace with inflation and could pay double (5000 per month) in 20 years at around 3% inflation.
I figured I would need at least 2 million of life insurance to match SBP's payout over the next 20 years. I priced out whole life and couldn't find anything reasonable compared to the term insurance numbers discussed above.
I couldn't find any inflation based insurance products (that were remotely understandable to the average human) on the market most likely because the risk to do so is very expensive and therefore not affordable.
If you're retiring, you may want to sign up for SBP (you can always cancel) and see if you can qualify for the best term rates before you cut ties with SBP. Then you can re-assess your health and insurance needs in 1-3 years and see what risks you are willing to take based on your net worth, health, and family situation. It's kind of like going to Vegas and making a bet--when you win you always wish you had bet more.
Also no Ssn offset and you can quit one time after 24 months then you are in for 30 yrs then premiums stop.
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