Pension Maximization

What Does Pension Maximization Mean?

Pension maximization refers to a strategy in which a couple purchases a single annuity instead of two separate or a joint annuity. The death benefit is then used to purchase another annuity for the surviving spouse.

Insuranceopedia Explains Pension Maximization

The objective of pension maximization is to secure a significantly larger monthly payout after retirement. The annuity should be large enough to fund a life insurance policy, which will be used to purchase another annuity for the surviving spouse. Because the policy needs to pay out whenever the insured spouse dies, couples typically use permanent life insurance rather than term coverage that could expire first.