Are Pensions Paid to Beneficiaries?

Shawn Plummer

CEO, The Annuity Expert

Are Pensions Paid to Beneficiaries?

Pensions are typically not paid to beneficiaries after the death of the retiree. However, there are alternatives to ensure financial benefits for beneficiaries. Two popular options include:

  1. Rolling the Pension into a Fixed Indexed Annuity with GLWB: This option provides benefits similar to a pension and allows any remaining balance to be passed to beneficiaries.
  2. Keeping the Pension and Purchasing a Life Insurance Policy: This approach maintains the pension while ensuring beneficiaries receive financial benefits through life insurance.
Convert Pension To Annuity

Understanding Pension Payouts and Beneficiaries

Pensions usually provide income for the retiree’s lifetime, with limited or no benefits transferred to beneficiaries upon the retiree’s death. The specifics can vary based on the pension plan.

Alternatives for Beneficiary Benefits

  1. Fixed Indexed Annuity with GLWB:
  2. Purchasing Life Insurance While Keeping Pension:
    • How it Works: The pension remains intact, and a separate life insurance policy is purchased.
    • Benefits: Provides a separate source of funds for beneficiaries after the pensioner’s death.

Pension vs. Annuity vs. Life Insurance

FeaturePensionFixed Indexed Annuity with GLWBLife Insurance Policy
Income for RetireeYesYesNo
Benefit to BeneficiaryLimited/NoneYes (remaining balance)Yes (policy payout)
Payout MethodLifetime incomeLifetime income + beneficiary benefitLump sum/death benefit
FlexibilityLowHigherHigh
Pension Beneficiary

Conclusion

While pensions typically don’t provide beneficiary benefits, rolling the pension into a fixed indexed annuity with GLWB or purchasing a life insurance policy while keeping the pension are viable alternatives. These options ensure that beneficiaries receive financial benefits, aligning with the retiree’s goals of beneficiary provision.

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Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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