How does this strategy work?

Many of your educator clients may not realize that their pension could be their largest assets when they’re ready to retire. However, if they pass away early, their state may only provide a life insurance benefit of 3x their salary for their loved ones. Instead, your clients can purchase a life insurance policy to make up the difference between what the state would pay and what they would receive in years of pension payments.

Strategy in action

Kelly is a teacher and has worked for the school district for 30 years. During her highest earning years, she made $70,000 per year.

If she lives another 25 years:
Kelly would get a pension roughly equal to 60% of her salary, or $42,000 per year, for life. (That’s $70,000 x 60% = $42,000)
If she lives another 25 years in retirement, she’d get just over $1 million ($1,050,000).

If she passes away early:
Without a pension protection plan, Kelly’s beneficiaries would receive a life insurance benefit from the state worth approximately 3x her salary, or $210,000. Not anywhere close to what she’d have received in pension payments.

How she can protect her pension
To protect her pension payments, Kelly purchases a life insurance policy that will protect the remaining $840,000, so her family can count on the whole amount she’d receive from her pension.

Prospective client

• Educators with a pension
• Age 30-65, or at least 10-15 years from retirement
• Healthy and can qualify for a life insurance policy
• Employer doesn’t provide other valuable benefits such medical benefits for the spouse if a joint-life pension option is elected.