The typical defined benefit pension plan may pose several challenges for your clients— mostly, the potential for less monthly income during retirement and lack of flexibility to change the beneficiary or the election option. The pension maximization strategy can help your clients gain death benefit protection while making the most out of the pension plan.

Client Profile:

• Needs life insurance protection and considering retirement
• Married, age 50 to 65
• Either spouse has a defined benefit pension plan
• Seeking to help maximize monthly income
• Prepared for the potential impact caused by loss of benefits for the surviving spouse that may be linked to the joint life option

Helpful Tips:

• The participant is ideally several years away from retirement, which may lower premium costs based on age, gender and health.
• Be sure the life insurance policy is in force before the client declines the Joint and Survivor option.
• When calculating the needed death benefit, consider a highly conservative approach (preparing for a scenario in which the plan participant dies soon after retiring).
• With some pension plans, selecting the Life Only option may disqualify the plan participant’s spouse from medical or other benefits that may be provided with the Joint and Survivor option.

Sample Cases:

• Sample Case: Protection Builder IUL
  Gary is a 62-year-old male (Preferred Non-Tobacco), and wife Mary is age 60. Gary is a long-time city official and with his pension plan, he is given a choice of $5,000 per month with the Life Only option or $3,500 with the Joint and Survivor option. With three grown children and a desire to travel, Gary is seeking to make the most of his pension plan. Gary decides to consider the pension maximization strategy using life insurance. Rather than taking the Joint and Survivor option, Gary can use the life insurance and an annuity to cover Mary’s income needs if he were to predecease her. He takes the Life Only option and uses some of the extra $1,500 per month to buy North American’s Protection Builder IUL product. At Mary’s current age of 60, it takes a death benefit of $638,000 to buy a lifetime single premium immediate annuity (SPIA) of $3,500 per month. At age 70, that need drops to $528,000 and at age 80 it drops to $394,000. Using Protection Builder IUL, Gary gains a guaranteed death benefit* at a cost of $877.34 per month to generate the coverage. The difference of $ 622.66 per month ($7,471.92 annually) is how much Gary is ahead every month using the pension maximization strategy!

View Gary’s Life illustration

View Mary’s Age 60 SPIA Illustration
View Mary’s Age 70 SPIA Illustration
View Mary’s Age 80 SPIA Illustration

*Subject to premium payment requirements.