When serving in the military, wondering whether your dependents will be covered if something happens to you can be a source of anxiety. Whether it comes from worrying about your inability to work after service or losing your life in combat, it is typical to worry about how your family can move forward without you as a source of income. There are two programs that are aimed at relieving that anxiety and aiding you in keeping the people you love covered. They are called the Survivor Benefit Plan and Dependency and Indemnity Compensation Payments, and they differ on who and when they cover.
The Survivor Benefit Plan is a plan for service members that provides monthly payments, or an annuity, that can be purchased from the Department of Defense and covers the beneficiary for their lifetime. The benefit amounts are based on a percentage of the Veteran’s retirement pay. The beneficiaries for a plan such as this one could include:
Each beneficiary category carries its own eligibility criterion and background. It is important to know which plan fits your needs best. The maximum rate for beneficiary elections is 6.5%.
This is the most common of the beneficiary choices in which the retiree chooses to cover only their spouse. The amount with this choice is based on the full retirement pay, and its cost is calculated by the coverage you decided on. If you decide on any plan that is less than full coverage, you must get your spouse’s signature and have it notarized for the choice to be valid.
Under this plan, all your children are covered equally. If you choose not to cover your children that choice cannot be changed later, so it is crucial to make your decision carefully. For your children to be eligible for coverage under this plan they must fit under these criteria:
If your child is enrolled in higher education such as college or university, they are eligible to be covered until the age of 22 or until they leave or graduate from the school. Any children with disabilities or that suffer from incapacitation are eligible for coverage. To be eligible, the disability/incapacitation must have occurred before the child reaches 18 years of age. Adding children to the plan will raise the cost depending on your age, your spouse’s age, and your children’s age.
You may choose to cover a former spouse under your plan; however, you must make this decision within a year of the divorce if the Veteran is retired. A Veteran may elect a former spouse at retirement no matter how long ago the divorce occurred. If you choose this plan, and are currently married, you do not need your current spouse’s signature in order to cover the other person. But, your current souse will be notified by Defense Finance and Accounting Services (DFAS) if a Veteran voluntarily elects to cover a former spouse. A current spouse signature is not required unless it is court ordered. It is also possible for your spouse to request coverage and have that request be accepted without you choosing to cover them. Because of this, it is wise to hire a lawyer to aid you in this complicated process.
You may decide to cover only your children under your Survivor Benefit Plan. With that in mind, you must have your spouse sign in agreement to only covering your children if you are married. Once your spouse agrees, the children that are dependents can be covered. The cost of this is based on your age and the age of your youngest child.
In the case of having no dependent(s) who are eligible, you do have the ability to cover a NIP. A natural interest person is someone that you have insurable interest in. This could be a child who does not fit the criterion of child coverage, or even a sibling. The coverage of this plan is the same as the rest but is much more expensive. Covering a NIP costs 10% of gross pay. Unlike other plans, you can cancel coverage of a NIP at any time. You may only choose this plan at retirement.
At the time of your retirement, you are not required to choose any plan to cover a beneficiary if you have no eligible persons to cover. It is crucial that you state no beneficiaries rather than simply not covering anyone.
Dependency and Indemnity Compensation is a benefit that is paid to any eligible survivors of military members who died while in the line of duty or any eligible survivors of a Veteran whose death was related to their service in the military. It is a monetary and tax-free benefit. Generally, the survivors are spouse or children of the service member and must meet certain criteria.
For a spouse to be covered they must meet one of the following criteria:
For a child to be covered they must meet the following criteria:
In order to be granted DIC one must prove that:
Berry Law’s team of experienced VA Benefits attorneys are equipped to help Veterans receive due compensation from the VA. If you or somebody you know has been denied disability benefits from the VA that you are entitled to, our team of dedicated VA attorneys can help. Contact Berry Law today to schedule a free consultation.
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