Se ha denunciado esta presentación.
© 2013 VSA, LP Valid only if used prior to January 1, 2014. The information, general principles and conclusions presented in thisreport are subject to local, state and federal laws and regulations, court cases and any revisions of same. While every care hasbeen taken in the preparation of this report, neither VSA, L.P. nor The National Underwriter is engaged in providinglegal, accounting, financial or other professional services. This report should not be used as a substitute for the professional adviceof an attorney, accountant, or other qualified professional.Taking Control ofYour Pension IncomeA RetirementIncome Protection Review1a2-03
An Important Decision at Retirement2Taking Control of Your Pension Income: A Retirement Income Protection ReviewDid you know that, at retirement, you might have to make a difficult decision that couldnegatively impact your future financial security and that of your spouse?You Might Have an Important Decision to Make at Retirement!The decision you make will determinethe amount of pension income youreceive for the rest of your life?This decision is generally irreversible?In making this decision, many peopleunknowingly purchase the largest deathbenefit they will ever buy and one overwhich they have no control?Did You Know...At retirement, you will have to decidehow your pension benefit will be paidout for the rest of your life:Should you elect to receive the maximumretirement check each month for as long as youlive, with the condition that upon yourdeath, your spouse gets nothing?Should you elect to receive a reducedretirement check each month, with thecondition that upon your death, your spousewill continue to receive an income?
Joint and Survivor Annuity Payout Requirement3Taking Control of Your Pension Income: A Retirement Income Protection ReviewWhat Is the Joint and Survivor Annuity Payout Requirement?If you are married, federal law requires that, in order to protect your spouse, you must elect a“joint and survivor” annuity payout option for your pension benefits. This guarantees that yoursurviving spouse will continue to receive at least one-half of your pension income.This concept is sound, except that you have to pay for a joint and survivor annuity payout option:Your pension benefit is reduced for as long as you live.If your spouse dies before you, your pension benefit cannot be restored to its unreducedamount.All pension payments cease when both you and your spouse die.Let’s take a closer look at what this could mean to you...
Pension Benefit Option Examples4Taking Control of Your Pension Income: A Retirement Income Protection ReviewLet’s look at the results of the three most common pension benefit options, using a hypotheticalexample:If you receive your pension benefit under the life income option, you receive themaximum lifetime pension payment. If you die first however, your survivingspouse receives nothing after your death. For example:Life IncomeOption:For as long as you live, you receive a monthly pension benefit of $2,000.If you die first, however, your spouse will receive a monthly pension benefit of $0.If your spouse dies first, your monthly pension benefit remains unchanged at $2,000.If you elect the joint and one-half survivor option, youll receive a lower lifetimepension payment. On the other hand, if you die first, your surviving spouse willcontinue to receive a lifetime pension benefit equal to 50% of your pensionbenefit prior to your death. For example:Joint andOne-HalfSurvivorOption:continued on next slide
Pension Benefit Option Examples5Taking Control of Your Pension Income: A Retirement Income Protection ReviewFor as long as you live, you receive a monthly pension benefit of $1,700 or about 85% of themaximum life income option benefit.If you die first, your spouse will receive a lifetime monthly pension benefit equal to50% of your benefit, or $850 per month.If your spouse dies first, however, your monthly pension benefit remains at $1,700.With the joint and equal survivor option, youll receive a significantly lowerlifetime pension payment. Your surviving spouse, however, will continue toreceive 100% of your pension benefit if you die first. For example:Joint and EqualSurvivor Option:For as long as you live, you receive a monthly pension benefit of $1,500 or about 75% of themaximum life income option benefit.If you die first, your spouse will receive a lifetime monthly pension benefit equal to100% of your benefit, or $1,500 per month.If your spouse dies first, however, your monthly pension benefit remains at $1,500.There may, however, be an alternative to reducing your pension benefit by 15% to 25% inorder to provide your spouse with a survivor benefit...
A Potential Retirement Income Protection Solution Using Life Insurance6Taking Control of Your Pension Income: A Retirement Income Protection ReviewFederal law allows a pension plan participant to waive the “joint and survivor” annuitypayout requirement, with the written consent of his or her spouse.This means that, with your spouse’s consent, you can elect to receive the MAXIMUM lifeincome annuity payout at your retirement.What, however, happens to your surviving spouse’s income and lifestyle if you should diefirst?With a retirement income protection solution, you purchase sufficient life insurance TODAYto replace the pension income lost at your death, assuring that your spouse will have anadequate source of income after your death.continued on next slide
A Potential Retirement Income Protection Solution Using Life Insurance7Taking Control of Your Pension Income: A Retirement Income Protection ReviewIn making this important decision, you should evaluate the risks associated with retirementincome protection funded with life insurance:Your income after retirement must be sufficient to ensure that the life insurance policypremiums can be paid and coverage stay in force for your lifetime. Otherwise, your spousemay be without sufficient income after your death.If your pension plan provides cost-of-living adjustments, will upward adjustments in theamount of life insurance be needed to replace lost cost-of-living adjustments after yourdeath?Does your company pension plan continue health insurance benefits to a surviving spouseand, if so, will it do so if you elect the life income option?
Retirement Income Comparison8Taking Control of Your Pension Income: A Retirement Income Protection ReviewYou receive a reduced pensionbenefit, the amount of whichis guaranteed.Your spouse is guaranteed toreceive an amount equal to allor a percentage of yourpension benefit.You are guaranteed tocontinue receiving a reducedpension benefit for as long asyou live.You receive your full pension benefit. Thereis, however, a cost for the life insuranceprotection.Assuming the life insurance policy has beenkept in force by the payment ofpremiums, your spouse can use the income-tax-free death benefit to provide a lifetimeincome.You continue to receive your full pensionand can continue to pay the life insurancepremiums or use any cash value to provideadditional retirement income.While you’reboth living...If you diefirst...If your spousedies first...Joint and Survivor AnnuityPayout OptionRetirement Income Protection Fundedwith Life Insuranceor
Retirement Income Comparison9Taking Control of Your Pension Income: A Retirement Income Protection ReviewYou cannot look to yourpension as a source ofadditional emergency funds.Receive nothing from yourpension when both you andyour spouse are deceased.You can borrow or withdraw any availablecash value from the life insurance policy(withdrawals and loans will reduce thepolicy’s death benefit and cash valueavailable for use).Can be named as beneficiaries of the lifeinsurance policy, if your spouse dies firstand you keep the policy in force.If you have afinancialemergency...Your childrenor otherheirs...A properly-designed retirement income protection plan using life insurance enables you to takeyour maximum pension benefit, retain control and flexibility and still assure your spouse’sfinancial security upon your death, assuming the policy is kept in force by the payment ofpremiums.Joint and Survivor AnnuityPayout OptionRetirement Income Protection Fundedwith Life Insuranceor
10Taking Control of Your Pension Income: A Retirement Income Protection ReviewTypes of Cash Value Life Insurance* Guarantees are subject to the claims-paying ability of the issuing insurance company.Whole LifeInsuranceThe policy owner pays a fixed, level premium and cash values accumulate at aguaranteed* rate of return.The insurance company promises to pay a guaranteed* death benefit.Policy dividends may be payable.Universal LifeInsuranceThe policy owner can increase or decrease premium payments and selectfrom a level or increasing death benefit.Cash value accumulations reflect current interest rates or are tied to a stockmarket index, such as the S&P 500 Index.There are four types of cash value life insurancefrom which you can select a policy that bestsatisfies your needs and objectives.The primary differences in the types of cashvalue life insurance fall into three categories:continued on next slidefixed or flexible premiums;responsibility for investmentdecisions; andbenefit guarantees or benefits basedon actual investment returns.
11Taking Control of Your Pension Income: A Retirement Income Protection ReviewTypes of Cash Value Life Insurance* Guarantees are subject to the claims-paying ability of the issuing insurance company.Variable LifeInsuranceThe policy owner pays a fixed, level premium and selects from a variety ofinvestment options for cash value accumulations. There is generally aminimum guaranteed* death benefit and the potential for higher deathbenefits, depending on the performance of the investment options selected.There is no minimum guaranteed cash value. Instead, the cash valueavailable depends on the performance of the investment options selected.VariableUniversal LifeInsuranceThe policy owner can increase or decrease premium payments and selectfrom a variety of investment options for cash value accumulations. If aminimum premium payment schedule is maintained, there may be aminimum guaranteed* death benefit.Cash values are not guaranteed. Instead, the cash value available, as well asthe potential for a higher death benefit, depend on the performance of theinvestment options selected.Your licensed financial adviser will discuss with you how specific cash value life insuranceproducts may work for you in your particular situation, including the productsfeatures, benefits, risks, charges and expenses.Note:
Retirement Income Protection Action Checklist12Taking Control of Your Pension Income: A Retirement Income Protection ReviewEstimate the risks associated with retirement incomeprotection, including:The Analysis …Calculate the amount of life insurance needed to continuethe desired income to your surviving spouse.Your retirement income must be sufficient to ensure thatthe life insurance policy premiums can be paid andcoverage stay in force for your lifetime.If your pension plan provides cost-of-living adjustments(COLA), should upward adjustments in the amount of lifeinsurance be considered?If your company’s pension plan continues healthinsurance benefits to a surviving spouse, will it do so ifyou elect the life income annuity payout option?The Plan …Determine the amount ofadditional life insurance you mustpurchase to fund the retirementincome protection plan.Select the type of life insurancepolicy.Establish your insurability.Arrange for payment ofpremiums.
You Can Manage Your Finances13Taking Control of Your Pension Income: A Retirement Income Protection Review“It’s by managing your finances that you write the storyof your life. You are both the author and the story’sprincipal character.Resolve to perform what you ought.”-- Benjamin Franklin