Author Topic: Spousal benefits on pension option or buy life insurance?  (Read 1720 times)

Rollin

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Spousal benefits on pension option or buy life insurance?
« on: February 23, 2016, 06:08:35 PM »
My pension is $2,077/month with lifetime benefits to the DW should I kick it.  $2,331 if it is just me, but of course I could buy the farm after the first month and DW would not get another penny.  What about taking the larger amount, but buy some life insurance with some of the difference.  Could I buy some for less than the difference of $233 and have her get the same or more lifetime benefits?  Keep in mind, if it matters, that the pension has a 2.29% cost of living adjustment every year.

I'm 55 and will FIRE in August.  DW is 56.
« Last Edit: February 23, 2016, 06:15:42 PM by Rollin »

terran

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Re: Spousal benefits on pension option or buy life insurance?
« Reply #1 on: February 23, 2016, 06:50:44 PM »
Not a whole lot of information, but this recent White Coat Investor post might give you some directions to research further: http://whitecoatinvestor.com/retiring-with-a-pension/

pbkmaine

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Re: Spousal benefits on pension option or buy life insurance?
« Reply #2 on: February 23, 2016, 07:03:36 PM »
The life insurance variation is often touted by life insurance agents, because they make money at it. But whole life is very expensive and term becomes very expensive as one ages. When one runs the numbers out, I have never seen it work favorably for anyone but the insurance agent.

Rollin

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Re: Spousal benefits on pension option or buy life insurance?
« Reply #3 on: February 23, 2016, 08:26:31 PM »
The life insurance variation is often touted by life insurance agents, because they make money at it. But whole life is very expensive and term becomes very expensive as one ages. When one runs the numbers out, I have never seen it work favorably for anyone but the insurance agent.

Probably right you are! I'll play with that a little.  I haven't even tried to price a policy yet, but will.

Not a whole lot of information, but this recent White Coat Investor post might give you some directions to research further: http://whitecoatinvestor.com/retiring-with-a-pension/

Heads me in the right direction for information though - thank you.

bogart

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Re: Spousal benefits on pension option or buy life insurance?
« Reply #4 on: February 23, 2016, 08:35:56 PM »
The life insurance variation is often touted by life insurance agents, because they make money at it. But whole life is very expensive and term becomes very expensive as one ages. When one runs the numbers out, I have never seen it work favorably for anyone but the insurance agent.

This makes sense to me (and -- full disclosure -- I have 100% survivorship in my DH's pension), but OTOH I have recently read a bit about something I've heard described as "longevity insurance," you pay in "now" (or whatever) and if you life to ##, where ## = say, 85, you get a lifetime annuity (starting at that age) of a preset amount.  I don't know the details, but it's possible -- perhaps not likely -- that the two (term life for awhile followed by longevity) could be glommed together to be workable.

That said, yes -- life insurance, even term, for my DH was absurdly expensive, so we don't have it.  And he's not THAT much older than the OP.

Rollin

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Re: Spousal benefits on pension option or buy life insurance?
« Reply #5 on: February 24, 2016, 04:51:29 AM »
The life insurance variation is often touted by life insurance agents, because they make money at it. But whole life is very expensive and term becomes very expensive as one ages. When one runs the numbers out, I have never seen it work favorably for anyone but the insurance agent.

This makes sense to me (and -- full disclosure -- I have 100% survivorship in my DH's pension), but OTOH I have recently read a bit about something I've heard described as "longevity insurance," you pay in "now" (or whatever) and if you life to ##, where ## = say, 85, you get a lifetime annuity (starting at that age) of a preset amount.  I don't know the details, but it's possible -- perhaps not likely -- that the two (term life for awhile followed by longevity) could be glommed together to be workable.

That said, yes -- life insurance, even term, for my DH was absurdly expensive, so we don't have it.  And he's not THAT much older than the OP.

You say absurdly (I have never typed that word in my life, but now know how to!) expensive.  Rough idea of how much that is? It sounds as though $100/month probably won't buy much then.  I'll look into that.
« Last Edit: February 24, 2016, 12:11:56 PM by Rollin »