Why I Believe Every Married NYSTRS Teacher Needs at least $1,000,000 in Life Insurance

Your Pension is very valuable.

This isn’t really a big secret, but did you know it could have a value of over $1,107,663!

Now you can’t actually receive $1,107,663 but according to www.immediateannuities.com, that is how much a 55-year-old would need to pay to generate $65,000 a year for their and their spouse’s life to replicate this income from an immediate annuity.*

.…but if you were to pass away before retiring, your family may only receive up to 3x your salary. You can view your in-service death benefit amount on page 2 of your NYSTRS Benefit profile.

Hypothetical Example:

For a teacher making $70,000 per year that passes away, the family might receive $210,000 (most of which is taxable too!) instead of the NYSTRS pension with its potential value of $1,100,000.

That’s nearly $1,000,000 difference!

The main point here is that there is a risk present that many aren’t aware of. If you die before you file for benefits, the value of that pension could drastically decrease for your spouse and family.

Since NYS doesn't protect your pension, you have to do it on your own. This is why I recommend at least $1,000,000 of life insurance term coverage until the NYSTRS teacher retires just to help protect the pension. If you have children, you likely need even more!

What does it cost for $1,000,000 of coverage?

Obviously the healthier you are the lower the cost will be. These quotes assume a non-smoker living in NY as of 5/10/2021.

As you can see, these costs can be very reasonable to protect a NYSTRS pension while you are still working.

After all, how would you feel if your retirement account  was worth $1,100,000 but your spouse only got $200,000 if you died? I know I would be upset.

This example is for illustrative purposes only. Actual results will vary. The information shown is hypothetical, does not reflect actual results, and is not a guarantee of future results.

*An immediate annuity is a contract between an investor and an insurance company, with the investor paying the insurance company a lump sum in exchange for regular income payments. Those income payments may be paid monthly, quarterly, semi-annually or annually, and are generally guaranteed to last as long as the contract holder is alive. In reference to general account obligations and guarantees, such as is present with annuities, the ability for the insurance company to meet these obligations to policyholders are subject to sufficient capital, liquidity, cash flow and other resources of the insurance company.

The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving life insurance, it would be prudent to make sure that you are insurable by having the policy approved. As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges. In addition, if a policy is surrendered prematurely, there may be surrender charges and income tax implications.

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