A teacher pension is a great benefit. In most states when a teacher retires, they have a choice when it comes to their retirement and how they receive a teacher pension. The first option is the “single life” which is the the total value of their pension paid as an annual salary. But when the retiree dies the pension ends leaving no income for the surviving spouse. This option is usually best only for people who are single.  If the teacher has a spouse there is an option to select a survivor benefit or spousal rider that allows for the pension to continue after the demise of the retiree to protect the spouse and provide income until the spouse’s demise. When dealing with retirement income and planning there are multiple variables to consider to insure the best outcome and one potential option might be utilizing life insurance.

Survivor Benefit for a Teacher Pension: A teacher pension offers a survivor benefit, spousal rider, or joint and survivor option (every pension uses different terminology) to allow the retiree to choose how their surviving spouse will receive income. Ultimately, teacher pension plans all are the same piece of pie and regardless if the retiree selects maximum allowance (retiree only) or selects the joint and survivor options the total payouts are equal.  The general concept is that if a joint and survivor option is chosen the total annual payout is less to offset the pension paying out a longer period of time to cover both the demise of the teacher and the surviving spouse.

Teacher Pension and Life Insurance: A potential solution for a teacher’s pension survivor option is permanent life insurance. If the retiree is healthy enough to  qualify for life insurance, though if you need a no medical exam policy, we can help you find the right fit for your health needs, at a preferred risk class the cost of insurance should be less than the cost of the joint and survivor option. We can even help you find affordable life insurance for smokers if that is something you are interested in.  A few variables come into play to analyze the costs and benefits:

1. Life expectancy of the retiree and spouse

2. Cost of permanent life insurance for the retiree

3. Teacher’s pension benefit compared to survivor option

4. tax bracket

If you are about to receive a teacher’s pension it might be smart for you to compare your options to maximize your retirement income. Contact an independent life insurance broker who can help you compare the numbers and evaluate your cost of life insurance before your elect your teacher’s pension benefits.