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Using Life Insurance for
Pension Maximization.
Discover a New Sales Growth Opportunity Today

The typical defined benefit pension plan may pose several challenges for
your clients— mostly, the potential for less monthly income during retirement,
lack of flexibility to change the beneficiary or the election option among other
items. The pension maximization strategy may be an alternative solution to
help your clients gain death benefit protection while making the most out
of the pension plan. Topics covered here include:

  • Client Profile
  • Helpful Hints
  • Ideas
  • Sample cases

North American is here to support your sales efforts— please contact us
today at (800) 800-3656, extension 10411 or email salessupport@nacolah.com
to learn how to put this powerful strategy to work for you.

Product Strengths

Here you'll find common traits for clients seeking a pension maximization
strategy using life insurance.

  • Ages 50 to 65
  • Married
  • Either spouse has a defined benefit pension plan
  • Have a current need for life insurance protection and are considering
  • Seeking to maximize monthly income
  • Are prepared for the potential impact caused by loss of benefits for
    the surviving spouse that may be linked to the joint life option

Helpful Tips

  • For this strategy, the participant is ideally several years away (5 to 10)
    from retirement, which may lower premium costs since the life
    insurance is based on age, gender, and health.
  • Be sure the life insurance policy is inforce before the client declines
    the Joint and Survivor option.
  • When calculating the needed death benefit, consider a highly conservative
    approach where the plan participant dies soon after retirement.
  • With some pension plans, selecting the Life Only option may disqualify
    the plan participant's spouse from medical or other benefits that may
    be provided with the Joint and Survivor option.


  • Consider permanent life insurance policies that offer guaranteed
    death benefit protection.1
  • To reduce the premium cost, adjust the life insurance death benefit
    as needs drop—as the spouse gets older the needed funds will
    decrease. Search for the amount needed and adjust the coverage
    amount at regular intervals (at least every 10 years). For example,
    if the goal is to use the insurance proceeds to purchase a single
    premium immediate annuity (SPIA), search for the spouse's single
    premium need (life insurance) at ages 65, 70, 75, 80, 85, and 90.


Sample Case One: Custom Guarantee®

Gary is a 62 year old male (Preferred Non-Tobacco) and wife Mary is age 60.
Gary is a long-time city official and with his pension plan, he is given a choice
of $5,000 per month with the Life Only option or $3,500 with the Joint and
Survivor option. With three grown children and a desire to travel, Gary is
seeking to make the most of his pension plan. Gary decides to consider the
pension maximization strategy using life insurance. Rather than taking the Joint
and Survivor option, Gary can use the life insurance and an annuity to cover
Mary's income needs if he were to predecease her. He takes the Life Only
option and uses some of the extra $1,500 per month to buy North American's
Custom Guarantee universal life insurance product. At Mary's current age of 60,
it takes a death benefit of $591,000 to buy a life time single premium immediate
annuity (SPIA) of $3,500 per month. At age 70, that need drops to $485,000
and at age 80 it drops to $347,000. Using Custom Guarantee, Gary gains a
guaranteed death benefit1 at a cost of $649.29 per month to generate the
coverage. The difference of $850.71 per month is how much Gary is ahead
every month using the pension maximization strategy!

View Illustration

Sample Case Two : Guarantee Builder IUL®

This indexed universal life insurance product offers long-term cash value
growth potential along with a guaranteed death benefit1 for clients seeking
peace of mind. Using the sample case above, Guarantee Builder IUL is
another option for Gary, but with the benefit of potential cash value growth.
Again, with the Life Only option he can use some of the extra $1,500 per
month to buy the Guarantee Builder IUL policy. Gary spends $1,000 per
month to generate the coverage and also gets cash value accumulation
potential projecting $145,201 in the 20th year. That's $500 per month
savings for Gary and an exit strategy in the form of projected cash value.

View Illustration


For help with pension maximization case design, contact Sales Development
today at (800) 800-3656, ext. 10411 or email salessupport@nacolah.com.