Too Late to Change My Mind About a Lump Sum?

Q: Just read your articles on universal life insurance. Unfortunately, I bought a $200,000 policy for $290/month to "insure" my Kansas Public Employees Retirement System retirement fund. I elected to receive monthly payments for the remainder of my life. The insurance agent recommended this to "insure" that if I die, my spouse would be able to collect "something" from my policy.

Is it too late to go back and take a lump sum? Should I drop the universal life and buy term instead? I am 56 years old, female, and in good health, good weight, etc., and am now working full time as a college professor.

A: You would need to talk to the pension provider to see if you can change your mind and take the lump sum.

As far as the use of life insurance for those with a pension, it is common. For instance, when deciding the payment amount, look at the payment based on a single life expectancy and then one based on payment for life of both you and your spouse. If a life insurance policy can be purchased that provides guaranteed benefits where the premium won't change, and that premium is less than the difference, then it can be a valid strategy to use.

In most cases, though, I tend to lean toward taking a lump sum instead of the pension.

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