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.
Can you opt out of SBP once you sign up? When I retired you could not get out once you were in. That was one of the reasons I declined the coverage. If something we're to happen to my spouse I would be stuck with the lower retirement payment. Also, I did not like the fact that my wife could not remarry should I predecessor her. Plus there was some kind of a Social Security offset (I heard this was changed). The entire program had too many conditions that could not be changed if our situation changed.