Should I Use My Pension or Buy Insurance?

[csalter]

Darn I sort of missed this one. I'm a little late to the game, but I want to jump in for kicks.

No shocker the boggle heads didn't know what to do with this, if they can't explain it away with "buy a well diversified index fund" it's pretty much outside of their realm.

Why GUL and why Aviva at that? GUL is based off interest rates, and all of those interest assumptions are based on current interest rates. Meaning that GUL is going to look mighty expensive in hind sight a few years down the road if interest rates rise like everyone tells me they are going to. Still, if you insist on GUL, you could at least comp shop this a bit. If you're going to insist on paying for 10 years, this is something you need to compare across the board because one GUL leading on monthly premium for a full pay GUL, might not be the winner for 10 pay endowment.

You could also pick up WL or IUL (with increasing death benefit option, not level) and dump extra money into them. You'll have a nice buddy to accompany your other retirement savings, and a constantly increasing death benefit. So, life insurance stays with you or even gets stronger (out-paces inflation) rather than get weaker like level death benefit GUL. Whole life is probably going to work out better based on your age; you'll need to pay attention to the Paid-up Additions rider. The strategy that would make the most sense is one where you dumps some extra PUA's in even after you retire, when done correctly this will simply be a situation where you move money from one pocket to the other, since after 10 years the whole policy will be growing more in cash than you put in, and if it's all PUA's that you contribute, it's all cash anyway.

So yes, you could make things better on yourself with a Pension Max, but take some time and look at it a little more thoroughly. A lot of agents are trained simply to show you a net present value (NPV) of an income stream, which may or may not be correct.

I chose GUL because I was looking for the most permanent insurance I could get for $1000 per month for 10 years. I wanted a sure thing that I would not lose and that would guarantee my wife would have the money to supplement my pension. At the time I was not going to select the 100% survivorship option but I was going to choose the 50% option.

Aviva gave the most for my insurance for what I asked for according to the agent. He was looking for what I asked for which was a safe sure permanent insurance policy that would be paid up in 10 years. I believed that the insurance was also going to be good because it was tax free.

I am now looking at this differently since I will need about $1.8 million in insurance to make up what my pension would pay out to my wife. I have received a Pension Max analysis and that is what I would need to insure myself for in order to take my single annuity.

After much discussion and debate and thought, it may seem best for me to get a convertible term policy instead.

 

[joymali]

The Pension Benefit Guaranty Corporation (PBGC) protects the retirement benefits of more than 40 million workers and retirees

 

[DHK]

Who is going to protect your privilege to post off-topic comments on old threads?