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Be Wise With Money

When a Pension Ends

Life insurance fills the income gap

Bill and Nelda Schrader, who were happily married for 56 years, traveled every opportunity they got during their lives together.

After retiring, Bill received a comfortable pension, which allowed the couple to continue enjoying the trips they loved. But the two knew they needed to plan for the inevitable: Bill's pension would end upon his death, raising the possibility that Nelda could face an uncertain financial future – alone – if they didn't act.

The Schraders turned to their Thrivent Financial representative. "You never really want to think about it, but we just wanted to make sure we had enough money to last us our lifetime," Nelda says.

The couple had long ago purchased individual life insurance on Bill to close the financial gap that would be created by the loss of Bill's pension upon his death. But they also wanted to make sure there were assets left over that could pass on to their children, preferably without a huge tax bill.

To help achieve that goal, their financial representative suggested survivorship life insurance. Also known as a "second-to-die" contract, it covers both spouses and pays out only upon the second death. The life insurance proceeds, which generally are income tax-free to beneficiaries, can provide money to help pay estate taxes, final medical expenses, funeral costs and other expenses.

Bill died in 2010 at age 82, but thanks to Bill's individual life insurance and their investments, Nelda has been able to continue enjoying her lifestyle, visiting with her children and grandchildren. She still spends her summers in Illinois and her winters in Florida. And "even after Bill passed," Nelda says, "my financial representative has been there for me."

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