kbesada

First of all, congratulations on your retirement conditions!!! Nice to know that the days of the pension aren't entirely dead YET! Also nice to know that you are attempting to make an informed decision and are very mindful about your retirement.

Traditional Whole Life as suggested earlier in this thread fits the bill, but almost in every circumstance, is a complete waste of money. Therefore, I recommend that you have your financial professional/advisor put together a Variable Universal Life Insurance Proposal for you. This product is not for everyone, but it seems to fit your needs. When you see the proposal, you will see that your contributions over and above your insurance costs and fees, go into a separate account that is based on mutual fund performance. Since you are relatively young, and the market is down, this is a great time to take a moderate risk. In the end, what you will get is the protection of the policy amount, but also a significant tax-free supplement to your retirement. Even though your pension provides for an inflation adjustment, having extra money for vacations, superior health care, or to pass in your legacy should also be considered.

Have that person assemble the proposal with a $1Million Face policy, contributions of $694/month (difference between 0% and 100% beneficiary vesting), contributions up to 84 years of age (your life expectancy), assuming 8-10% growth (scaled back to 5-6% in retirement), with a level death benefit.

Although this is not typically how I would construct the policy, it would serve as a great illustration for you to compare in contrast to what you are currently thinking. If constructed in this manner, I would consider taking out an additional $1Million 10 Year Term Policy. After the 10 years go by, allow it to lapse, because the VUL is starting to grow some serious cash value.

What you will have is a way more than adequate death benefit to sustain your wife's lifestyle AND a rather substantial tax-free retirement supplement that has grown in your life policy. In this example, at age 84, when you cease contributions into the policy, you would have $1.5Million TAX FREE to borrow from your policy value (with reasonable accumulation assumptions).

While this is not the manner in which I would structure the VUL for you, it serves as a great example that it is something that is worth looking at. You without a doubt run the risk of dying early, which increases the chances of poor financial decisions with a $1-2MIL lump sum, tax free life insurance pay-out. However, this too can be remedied if properly worded in a trust.

I know that I have left out a ton of information, but due to my time constraints, I cannot write a term paper on this. I just hope that it helps you out. If you do not have a financial planner that can put this together for you, send me an email, and I will mail you a customized VUL/Prospectus that you can then present to a local professional.

A combination of Term Insurance and Annuities may also fit the same bill. Annuities, like the VUL, grow tax deferred and have benefiary protections built into them. Too hard to tell you what to do without you spilling your guts on your whole financial situation and goals.

Kenneth Besada
Insurance/Financial Services
EMAIL: Kbesada@FarmersAgent.com




P.S. Part of what you pay in life insurance premiums is a state tax that protects for insurance company insolvency. Therefore, life insurance pay-outs may in fact be more secure than your pension, unless you have a government pension. Supreme court rulings for companies under extreme financial duress can either slash or eliminate your pension too. When shopping for any insurance policy look for a company that is conservative with its assets.