Pension Maximization
The concept of Pension Maximization is quite simple to understand:
1) Purchase a life insurance policy on yourself prior to retirement and name your spouse and / or children as the beneficiary. The death benefit of this policy will replace the lost pension benefit if you are to die first.
2) At retirement, you select the single-life or "max benefit" option so that you will receieve the greatest pension benefit for as long as you live.
3) You then use the additional pension funds (the difference between the max benefit and the survivor option) to pay for the life insurance policy.
Frequently Asked Questions
Who is the ideal candidate for Pension Maximization?
Any reasonably healthy pre-retiree who will be retiring from a qualified pension plan, especially those who are considering taking a reduced pension option in order to provide continuing benefits to their surviving spouse.
Why should I consider Pension Maximization?
Because if you are going to select the Survivorship option from your pension, then you will essentially be paying a "premium" anyway. It only makes sense for all pre-retiress to consider their options and see which "premium" will be the most cost effective way for them to provide benefits to their surviving spouse.
At what age should I consider purchasing the insurance policy?
The sooner, and the younger, the better. As you get older, life insurance premiums will increase. You also run the risk of having a health change that may prevent you from qualifying for a reasonably priced policy. Therefore it makes sense to lock in a life insurance premium when you are young and healthy.
When is Pension Maximization not an option?
The concept of pension maximization does not work out as well for people who are in poor health or who use tobacco. The reason is simply because their health history will cause their applications to either be heavily rated or declined. If the premium for the life insurance policy is more expensive than the survivorship option, then it would make sense to select the option.
OMNI's highly trained representatives are available to help you MAXIMIZE your PENSION by calling 1-800-966-6641.