How To Maximize A Pension With Life Insurance

Shawn Plummer

CEO, The Annuity Expert

You have some important decisions to make if you participate in a defined benefit pension plan, are married, or have a domestic partner nearing retirement. For example, when you retire, you’ll likely have the choice between life only or joint and survivor pension benefits.

The life-only benefit provides a higher benefit payment, but the benefits end when you pass away, leaving nothing for your surviving partner. On the other hand, the joint and survivor benefit ensures that pension benefits continue for your partner, but the benefit payments are reduced.

A pension maximization strategy using life insurance can provide a compromise between these options.

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The Best Way To Enhance A Pension With Life Insurance

A husband and wife are in their early 60s, and he plans to retire in three years. He learns that his pension plan’s

He wants to maximize his retirement income and help protect his spouse financially. So he decides to select the life-only option. He uses some of the additional $1,500 monthly benefits under this option to purchase a permanent, guaranteed death benefit life insurance policy.

The life insurance death benefit will be paid to his wife upon death. The death benefit amount is intended to develop sufficient income to match his wife’s amount if he had selected the joint and survivor option.

In his particular situation, he purchases a $755,000 death benefit at $1,125 per month. The difference between his additional benefit and the insurance premium is $375. Thus, he comes out $375 a month ahead with the life-only option and still provides a spouse’s death benefit.

There are also some important things to consider before you purchase a life insurance policy. First, exploring your options and creating a clear picture of your needs is important.

Contact us to develop a pension maximization strategy and decide which approach is right for you and your beneficiaries.

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Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

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

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