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10 Year Certain and Life Option

Submitted by danea on 18 May 2009 - 9:17am

One of my pension payment options is “10 Year Certain and Life Option”. Under this option, you receive fixed monthly payments for your life, with guaranteed monthly payments for the 10 year certain period. If you die within the certain period after payment begins, a Beneficiary will receive the remaining guaranteed payments. If you live beyond the certain period, you will continue to receive payments for your lifetime, and payments will stop when you die.

I have no idea how prevalent this option is in the industry, but I’m raising the point in case there might be interest in adding such a pension option to ESPlanner. I do not see how to enter such an option in ESPlanner now.

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Submitted by Dick Munroe on 19 May 2009 - 8:42pm.
1

Isn't this equivalent to an annuity? If you take this as an annuity with survivor benefits, then get what you want. I'm not 100% sure that this is completely the same thing but it sure sounds close.

Best,

Dick Munroe

Submitted by Laurence Kotlikoff on 19 May 2009 - 10:00pm.
2

This is, in effect, an annuity plus a special life insurance policy. (One can't beat Dick on the economics. He's a natural economist.) So just enter this either as an annuity or as a pension with no survivor benefit and then enter a contingent special receipt for your spouse equal to the pension that continues for the 10 year period and then stops. best, Larry

PS, call me at 617 834-2148 if this is confusing.

Submitted by danea on 20 May 2009 - 8:47am.
3

Thanks ... not sure this pension option would be my first choice, but I can always hobble something together to check it out.

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