Teachers, Retirement, and Life Insurance
As a teacher one of the biggest benefits received is the pension plan. This pension plan allows for a comfortable retirement provided by the piece of mind of having a regular monthly income stream to pay the day-to-day bills. Typically, workers without a pension need to make a strenuous effort to save enough money to support their retirement needs; retired workers with a pension plan, on the other hand, are provided a good portion of the income they enjoyed throughout their lives.
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The costs of retirement
The issue with this is that it is very expensive for school boards to maintain such a pension plan. Especially with the recent state budget shortfalls across the country, school boards are facing the choice of whether or not to continue providing pensions. Budgets are tightening everywhere it can make it very difficult to continue to meet pension obligations.
Case example: Life insurance through Texas school boards
School boards in Texas are turning to life insurance as a potential option to fund their pension plans. This may leave you wondering how they will do this -- typically life insurance is a product used by individuals to provide benefits to a spouse or other family members in the event of death. The Texas school board, though, is working with UBS to have the pension plan be the beneficiary in the case of a teacher's death.
With such a plan, the pension plan will pay the premium on the life insurance and will receive a payout upon the teacher's death. They hope this will help make up the funding shortfall. This plan does have teachers in an uproar -- the teachers are seemingly insulted by the fact that the pension fund is taking out a policy that is based on their death with little or no benefit to them directly.