The one common denominator I have notice in all people is no one likes to talk about death and the what ifs. I don't really like to talk about it myself; however, I do know that the one certainty that I have in this life is that it will end at some point. It sad and depressing to think about it, but it is irresponsible not to talk about it and plan for it.
I have been doing taxes and financial advising for years. The one thing I have witness is the lack of preparation most Americans have in regards to their future and for the possibility of an untimely death. One thing I have noticed as Americans is we tend to think that if we don't talk about it, then it will never happen. Well in my opinion if we truly love our family and friends, we will take care of the end of our life so they don't have to. We need to allow them to just grieve. We have all been there. Grieving the loss of a life precious to us is hard enough, but then searching for funds to pay your respects and handling your loved one's final expenses is just horrible. So let me just add another level of fun to your brain....let's talk about the wounded and another battle they face.
Healing a wounded hero is hard enough. Then you have to add in the battle with the system. We get to face that almost daily. Then you add in the family dynamics and the list goes on and on and on. I cannot begin to explain how exhausting it all is. Just when you put out one fire, poof there starts another. Just went you get this stack of paperwork filed, here comes another set. One day you have to face the reality that more than likely you will out live your wounded Hero. And what if you go first? If you go first who will be there to take your place? These were the things that kept me up at night. Now I have them settled and I am going to share my planning with you in the hopes it helps one other family.
When you are transitioning out of the military, so many things are thrown at you at 100mph. You have to run all over your installation to get a ton of signatures. You have to sit through a ton of briefings. The sad thing is we (the military community) are not making sure that the briefings are simplified enough for the average service member to understand them. I have spent the past few months going over benefits trying to help out so many families that I have lost count now. So many have said, gees I wish someone would have explained it to me that way. Or I wish I would have known. So here's my attempt to explain my opinion about one topic for wounded military families everywhere, DIC, SBP, Life and Death of our 100% disabled. Or as some would put it "Life of the P&T." P&T means permanently and totally disabled. ;)
DIC stands for Dependency and Indemnity Compensation. What does that mean? Here you go...http://benefits.va.gov/COMPENSATION/types-dependency_and_indemnity.asp
Basically it is compensation paid to a person when a service member has passed from service related injuries. The stipend comes from the VA, once proof has been substantiated that your veteran's death was service related. It's a monthly stipend that will adjust for cola and inflation. Here's the monthly rates for 2012. http://benefits.va.gov/COMPENSATION/resources_comp03.asp#BM01
Here are additional links for DIC
Ok now for SBP. SBP stands for Survivor's Benefits Plan. What does that mean? Well is basically a way for spouses to continue to receive a monthly stipend once there service member passes. To simply it, you pay 6.5% of your monthly retirement into SBP and when your service member passes, the survivor will receive 55% for the rest of their life. Let's use even numbers to clarify. Let's say you currently receive $3000 per month. You would give $195 to SBP and when your service member passes you receive $1,650 per month or a yearly income of $19,800. Here's a pretty good overall explanation of what SBP is. http://militarypay.defense.gov/survivor/sbp/index.html
Additional links for SBP
Now let's compare the two. DIC is free, SBP costs 6% of your current monthly retirement income. DIC requires paperwork and processing and can take over a year to process and could be denied several times before you finally begin receiving it. SBP begins as soon as retirement income ceases due to death. DIC is non-taxable. SBP is fully taxable. Both adjust for inflation and COLA. Confused yet? Just wait...
If you have both DIC and SBP, then once the DIC claim is accepted then you will receive the non-taxable DIC and then they will subtract that from your SBP and SBP will give you the difference the SBP portion will be fully taxable. In addition, as the law stands you will be refunded some of your SBP premiums once your DIC claim is accepted.
So let's look at that example from earlier. You service member passes, you receive $1650 per month. Then your DIC kicks in. You will now get $1215 (non-taxable) from DIC then $435 (fully taxable) from SBP. (I am not going to get into the SSIA payments because they are set to expire in a few years. SSIA is Special Survivor Indemnity Allowance and applies now. I am looking to beyond their expiration and planning for such.)
Here are a few comparison links of DIC and SBP.
Why are our injured service members so confused? Well because you'll see no one really breaks it down for them Barney-style. Here's the kicker. You must enroll in SBP before you retire. If you do not, then you have lost the benefit. In 25 years they have only allowed retirees to randomly enroll 4 times. So if your exit counselor doesn't break it down to you in words you can understand then you deny the benefit and then what? Many of our families just see the premium and freak out and immediately say it is too expensive. However, what they don't understand is if they don't have a pre-existing life insurance policy obtained prior to injury, SBP really is the most feasible option.
Now let's chat about life insurance....Companies would love to insure our Heroes. They'll happily for it for a very hefty price tag that usually exceeds the SBP payment, with a much lower payout. That payout will be a one time shot and will not adjust for inflation or COLA, but hey, it should be non-taxable, so you are all set right? Why is it so hard to insure our Heroes? Well....PSTD, TBI, blood clots, drug use, increased risk of cancer and other life threatening illnesses are among the short list.
The SGLI (Servicemember's Group Life Insurance) which ever active duty service members recieves during active service, covers our P&T for two years after medically retiring from the military. After those two years you have the option to enroll in VGLI (Veteran's Group Life Insurance). http://benefits.va.gov/insurance/vgli.asp Make sure you look at the rates. Here's where and why I like SBP over VGLI. You stop paying SBP once you reach 70 and make 360 payments. Look at the VGLI rates for $100,000. Yup $225 per month. That exceeds your SBP rate by quite a bit and if we are looking to 35 years from now that $100,000 will be worth about half of that.
So what have Chaz and I done. First we took out a life insurance policy back when we were 21. (Seriously one of the smartest moves ever.) Next we are paying for SBP. Then I took out an additional policy for me, because I know if Chaz loses me, he and the girls will need a lot of help. We also have $10,000 for each of our girls. Funerals cost right around that amount these days. And if we lose one of the girls, money is the last thing I want to think about. I cannot imagine I will be sane if that happens.
I will never figure out why our society makes so hard to talk about death. I know it's depressing to talk about the loss of someone. Lord knows I don't just sit around talking about it all the time, no thank you! Chaz hates talking about it. He says it just makes you so uncomfortable. I totally agree, but I love my family so very much I want to make sure I do the right thing and help them through that horrible transition.
For the wounded families out there, I have gathered some of the facts up for you. I truly hopes it helps you in your future planning. I seriously cannot stress enough that you really need to be thinking about how to take care of your family in the event of your untimely passing. I can't stand the thought of a world without Chaz in it, but I know that planning for the what ifs is exactly what I must do. I did it when we were 21 and now thanks to an IED I had to think about even more what ifs and update my plans accordingly. I hope you will too.