Page 54 - Ready Set Retire

Stephen J. Kelley

Now let’s think about this for a second. What is the benefit
you are paying $8,000 a year for? It’s to provide ongoing
income to your spouse should you die. What does that sound
like to you? Paying $8,000 a year for a cash benefit if you die?
Could that sound like life insurance? It sounds an awful lot like
it to me, with a couple of exceptions.

The first is you can only name one beneficiary. What kind of
life insurance is that? Why can’t you name secondary
beneficiaries? Or even two primaries? It doesn’t work that way.

The second thing about it is the payment is permanent unless
you have the afore-mentioned pop-up feature. But get this.
Even though the payment is permanent, the benefit isn’t
necessarily so. Think about it. If your spouse dies before you,
you get to keep on paying the premium in the form of lower
pension payments, but you are paying for a benefit you can never collect!
I don’t know about you, but to me that doesn’t sound like such
a good deal.

And even if you can collect the benefit, meaning you die before
your spouse, each year you live, the benefit goes down. That’s
because, as time passes, your spouses lifespan shrinks as well.
In other words, it’s a diminishing return.

Here’s a thought. What if you could go ahead and take the full
benefit, the full $40,000, and then use the $8,000 you would

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