Cal Lester wrote:
- quote -

I was thinking about the situation several years ago where a
number of pension funds had bought annuities for their retirees
at "bargain" rates(for unrealistically low lump sum values) instead
of paying the retirement benefits out of the pension trust fund. This
may have been due to plan termination and the employer was attempting
to recoup as much of the fund as possible for its own purposes. In
any case, the insurance company became insolvent and these individuals,
who were relying on the insurance company to provide their
benefits, had their payments delayed or possibly ultimately
reduced. After the annuity purchase, there was no longer PBGC coverage.

In any case, the situation prompted additional pension
regulations to be passed that required the plan sponsor to
do a more thorough review of the insurance company for
solvency problems before purchasing annuities for its retirees
or deferred annuities for its vested terminated employees.
If not, the sponsor could be found in violation of its fiduciary
duty, etc.

Frank

No. What I am trying to do is mimic the behavior of the pension that the
insurance would replace and the pension has no inflation adjustment.

--
_Bill_

"Cal Lester" <cal-lester[at]comcast.net> wrote in message
news:mP6dnQyAgOZjcaPfRVn-1Q[at]comcast.com...

- quote -

Actually, what I was alluding to is that a person could learn about
investing and have a plan in place prior to the implementation. Why do
people wait?

Elizabeth Richardson

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What you allude to is the reason that I included in my prior posts that
the Life Insurance Contract "could" be either Interest Sensitive OR
Market Sensitive. You seem to have taken the position that a bereaved
person would/could make investment descisions on their own. Either
of the above mentioned contracts could eliminate and or reduce that
NEED to make descisions.
Cal Lester CLU

"Bill" <no[at]no.com> wrote in message
news:Kuo%d.1516$uC2.5975[at]eagle.america.net...
- quote -


If there is no adjustment for inflation, then you are restricting the amount
available to anyone who is depending on the payment for living expenses. You
seem to be forgetting that inflation erodes purchasing power. In fact, if
your pension doesn't have an inflation clause, then by the year 2020, your
pension benefit may also be inadequate. Wouldn't it be better to be looking
at an insurance policy that pays a lump sum so that the beneficiary could
invest according to one's needs? If you're afraid that your wife would be
unable to do this, you have a few years for her to learn. (If she's smart
enough to have stayed married to you all these years, I'm sure she's smart
enough to learn a little about investing.)

Elizabeth Richardson

Frank wrote:
- quote -

The first part of the above may actually be correct, HOWEVER it
is my understanding that it DID NOT EFFECT CONTRACTS UNDER
DEATH CLAIM PAYOUT (except in the case where exaggerated
interest projections were made. in those, the GUARANTEED interest
rate was paid).

Cal Lester CLU

Bill wrote:
- quote -


The Policy is ANY form of Whole Life, or it can be done equally
well with a Universal Life Policy. The "program" or "concept" is
called "Pension Max". Almost any Professional Life Insurance
Agent can prepare an illustration for you. Or if you prefer, you
can contact any company that you currently have Life Insurance
with, and they can do it for you.

They determine the Face Amount that would be required to produce
the desired income, and deduct that amount from the "Life Income"
amount that YOU could receive.

Cal Lester CLU

Cal Lester wrote:
- quote -

Weren't there some where payments were delayed while the details of
who and what should be paid at the time of insolvency were being
worked out? Even if everyone was eventually paid in full, going
without payments during retirement may be a significant hardship
if no other income is available.

Frank

Thanks for the clarification Cal. If I understand you correctly you are
talking about a life insurance policy that would pay a fixed amount
monthly (or annually) to my wife starting on my death and continuing until
her death. The amount would remain the same throughout the pay-out period
with no inflation adjustment. If that is correct then it is exactly what I
am looking for. Can you give me the correct technical description of this
type of policy so I know what to ask for when I start shopping?

--
_Bill_

- quote -

I do believe that you might have missunderstood the potential of your
current pension plan. It MOST cases, the PLAN will pay a STIPULATED
SUM for your life, and a percentage of that amount for your spouses
life. NORMALLY they do NOT GUARANTEE that the income will
keep pace with inflation. The Life Insurance contract that I have been
refering to does EXACTLY the same thing.
Keep in mind that it may be possible in BOTH cases to use a
"VARIABLE" product which would FLUCTUATE with the MARKET,
if that is your concern.

As to the RISK that you refer to, the contract would be GUARRANTEED
by the company (AND OR IT'S SUCCESSOR'S). To my knowledge,
and I have been in the industry since April of 1963, there has NEVER been
a time in which a Life Insurance company has gone "belly-up", where the
INSURED withstood a LOSS of the GUARANTEE of the contract. In
every case that I am aware of, another company (or companies) has taken
over the book of business, and completed the contracts.


Cal Lester CLU

I guess I was not clear. One of my concerns with life insurance is that
you cannot tell me today the amount of insurance (face value) that will be
required in the year 2020 when I die to provide my wife with an income of
$N per year for the rest of her life. Unless I am missing something (which
is certainly possible) the best that any of us can do is guess based on
what rate of return we _think_ she might be able to get when she invests
the proceeds of the insurance at the time of my death.

The pension has zero risk attached since it is small enough to be fully
covered by PBGC insurance. An annuity that would pay the required $N per
year on my death has one risk factor, namely that the issuing company will
be able to make the payments. A life insurance policy has two risk
factors. The first is whether the issuing company will be able to pay and
the second is whether the face amount of the policy will provide enough
capital to generate the required $N per year of income for the rest of her
life given the rate of return that is available at that time.

The only condition under which that much risk makes sense, IMHO, is if
there is enough other income that my wife could live without the
insurance/pension provided income and the cost of the insurance was
substantially less than the difference in the single and joint pension
benefit so that we would have significantly more money while we are both
alive.

The reason I am investigating this is that we _might_ take the risk if we
could save an appreciable amount of money by getting a policy from a very
highly rated insurance company that would guarantee to pay a specific
amount per year to my wife starting at the time of my death. Under no
circumstances will we take the additional risk of not knowing how much
income the insurance will provide for her. One reason for this is that
over half of our retirement income will come from our investment portfolio
and that portfolio has been carefully designed to incorporate all of the
risk we believe is prudent.

--
_Bill_

Cal Lester wrote:

- quote -

BMS wrote:
- quote -

EXCELLENT advice
Cal Lester CLU

DM wrote:
- quote -

Not at all true. A GUARANTEED WHOLE LIFE POLICY will have a
FIXED premium that NEVER increases. There are other contracts
that offer similar provisions.
The only time that the C.O.I. comes out of the current C.V.A. is in
an Interest sensitive policy (U/L) that was UNDERFUNDED originaly.

Cal Lester CLU

Bill wrote:
- quote -


If you re-read my post, you will see that at no time does anyone
NEED to BUY an Annuity. YOU have purchase a Life Insurance
Contract, and at you Death, the FACE value of that policy should
be sufficient to provide a Life Income to your WIDOW.
Cal Lester CLU

- quote -

- quote -

The above admonision is basically true, but very missleading. You would be
purchasing (or at least SHOULD) a GUARRANTEED policy. The Cash
Value WILL build up as GUARANTEED.


- quote -

In all probability, the WIDOW would elect to receive a Life Income
from the GUARANTEES in the Life Contract.
Cal Lester CLU

Sit with a trusted advisor and run a pension maximization analysis. Pension
Max can review the particulars of your situation and determine the best
choice.

Often it is taking the A option and buying life insurance.


"Bill" <no[at]no.com> wrote in message
news:im1%d.1474$uC2.5441[at]eagle.america.net...
- quote -

Bill,
Stick with the Joint Surviorship Option. The cost of the Insurance
will increase, and in a cash value policy, if you don't increase your
payments, the increased cost of Insurance comes out of your "CASH
VALUE". There are alot of questions I would want to know about you
before I really offered any advice. Age, Time Until Retirement, "What
your wife thinks!", etc.

Andrew

Thanks but I do understand the difference. Life insurance might work if I
could be certain that the proceeds of the life insurance would be used to
purchase an immediate fixed annuity that would provide an income equal to
the amount of the pension for the remainder of my wife's life. The problem
is that there is no way to predict the cost of the annuity in advance
hence there is no way to determine the amount of insurance needed. There
is no way to determine the present value at an unknown future date of an
income stream starting on that unknown date. To do so you have to guess at
the rate of return that will be available on that unknown future date and
that introduces an unacceptable level of uncertainty in this case.

If I recall correctly the example I read about used something called a
reversionary life annuity (I may well have that term wrong as it has been
awhile since I read the article). I believe the explanation of this type
of policy was that if I die first it would provide an annuity for my wife
and if she dies first I would recover the premiums as payments over some
period of time.

Any other suggestions?

--
_Bill_

Cal Lester wrote:

- quote -

Bill wrote:
- quote -

Actually, by law, if you are married, you receive a joint and survivor
annuity. The only way you can get a single life annuity or any other
type of payout is if your spouse signs away her rights to receive the
survivor lifetime annuity.

- quote -

Presuming you mean, you would buy a life insurance policy on your life
with some portion of your single life pension(annuity) payment, you
need to be very careful that you can afford to pay the insurance
premium as long as you live. Otherwise, there won't be much, if any,
money for your spouse to buy an annuity with for her remaining lifetime
at the time of your death.

Life insurance can be expensive if bought at a later age. There are
many circumstances in which you could default on many different types
of policies and end up with nothing. E.g. Term insurance premiums
may not be guaranteed and may rise. Market based policies may lose
money and require greater payments. Cash value may not build up very
fast, since many policies have large up front expenses.

Presuming your life insurance does provide enough to replace the
survivor benefit at your death, your spouse's annuity will not be
insured by the Pension Benefit Guaranty Corporation as your single
life pension fund annuity was. So, she will be reliant on the solvency
of the insurance company you choose or any State Guaranty Fund.

Frank

Bill wrote:
- quote -

Your premise is VERY correct, unfortunately you are confusing the terms
Life Insurance & Annuity in the discussion.
If you "opt" to take the Life Annuity payout of your Pension Plan, then in
all probability the amount that you would receive will be considerably more
than the amount that you could receive with a "joint & Survivor".
That difference (and you can get any number of illustrations to show that)
should then be sufficient to purchase a Whoel Life or Universal Life Policy,
on YOUR Life, with your Spouse as the Primary beneficiary.

a) the longer you live, the greater the amount of Cash Value there would
be built up in the contract if your wife dies before you, and YOUR income
would then increase by the amount of the premium that you no longer pay.
b) if you die first, then the DEATH PROCEEDS payable to your wife
should be sufficient to provide an income compareable to the amount
that YOU had been receiving when you were alive. (this too can be illustrated.)


- quote -

Answered above, you do NOT purchase an Annuity, you DO purchase Life Insurance

Cal Lester CLU