Pension maximization is accomplished by combining the single life option with a life insurance policy to produce a higher monthly pension benefit along with a death benefit that may be used as a source of retirement income for a surviving spouse.

Take a closer look at pension maximization…

Suppose you are retiring and are offered either a pension of $3,000 per month for the rest of your life (the single life option), or $2,500 per month for the lives of both you and your spouse (the joint and survivorship option).

For a married couple, the joint and survivorship option with the lower monthly benefit may seem like the best choice in the beginning, since it ensures continued income for a surviving spouse.

But, another possibility is to choose the single life option with the higher monthly pension benefit and use a portion of that amount to buy a life insurance policy on yourself, presuming that you qualify for a policy, subject to underwriting.

If you were to die before your spouse, the death benefit can provide your spouse with a source of income to help offset the loss of your pension benefit.

Death benefits depend upon the claims paying ability of the insurer, which is why we take great measures to work with top rated carriers.

 This strategy offers many advantages:

• You and your spouse get a higher monthly pension benefit. You can use part of these funds to pay the premium on the life insurance policy. As long as you maintain a sufficient amount of life insurance, it will provide your spouse with a source of retirement income if you die first.
• Cash value can provide a ready source of money for emergency or other needs. Cash value life insurance accumulates cash value on a tax-deferred basis, in addition to providing a death benefit. The insured may borrow against the cash value during his or her life. *Any unpaid loan amount will reduce the death benefit.
• Life insurance provides supplemental income for a surviving spouse. Death benefit or cash value proceeds are not subject to the minimum distribution rules that are inherent to other tax-deferred savings vehicles. +Death benefits are received income tax free when paid to a named beneficiary. Benefits may be used as a source of supplemental income or in whatever manner your surviving spouse chooses.

*Your life insurance policy may lapse if the premiums are not paid or if substantial cash values are borrowed and interest is not paid.

*A lump sum death benefit must be properly managed to yield the anticipated income.

* By waiving the spousal provision, your spouse may lose benefits provided with the pension, like health insurance or cost-of-living adjustments.

* The issuance of life insurance policies is never guaranteed. With so much at stake, you must consult with us BEFORE you select your pension payout option!

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Please remember this tip is designed to be of help for you, but is not to be relied upon as advice. It is just a reminder that there are many options that you have available, and that planning is the only way to find the right answers for your situation! As with any financial issues, make sure you get the right info before making a decision! If you have any questions, we’ll be glad to help you!

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