Thread revival. My father in law is a financial planner, so I figured I'd just ask him for his thoughts.
Numbers I gave him were:
$3,600/month pre-tax
SBP payment of $234/mo
Death Benefit $1980/mo
His response
"SBP is an insurance policy that provides the monthly payments to [wife]. Very common. You could do the same thing by buying your own policy, however, like you said, it might cost more because of your flying. You wouldn't have to buy the policy until just before you retire. Would certainly have to have in place before you made your retirement decision.
Assuming a 25% combined tax bracket (this is determined by adding your federal and state tax together and dividing it by your taxable income. It tells you what percentage of your income goes to tax.) then the true cost of the premium is $175.50 per month or $2,106 per year.
When you retire, [wife] will be 41 with a life expectancy of about 40 more years. Assuming a 5% return on an insurance policy, you would need about $425,000 to pay the same annuity amount as SBP. However, this doesn't include the 2.5% COLA that SBP would provide. With the COLA, my guess is that you would have to double the insurance.
Actually, SBP looks pretty good. The COLA is a big deal. Also, it's insurance that can be stopped if she dies first, and started if you remarry. I suspect that in the event of a divorce, the court would require you to keep paying on her behalf.
If you die after retirement, Jen's income is cut almost in half. Perhaps even more insurance should be considered."