Restrictions do not apply when the beneficiary is older than the retired member. Unless there were other substantial savings, this could leave the spouse and kids almost nothing. The only financial legacy of the academic would be the house, car, and pile of old books. Many Americans can expect to live 20-30 plus years after retirement. One potential solution to this dilemma was proposed by an Oregon State University professor in the College of Business.6 Dr. Norma Nielson tested life insurance as a substitute for survivor's pension benefits.
Insurance proceeds to assure income for the surviving spouse at the retiree's death.
Flexibility to change the beneficiary under the insurance policy. If the employee's spouse died, he could change the beneficiary to the children or a future spouse. Cash value for the retiree if the spouse dies first. If he did not want to continue the life insurance policy, he could stop paying premiums and cash in the built-up value. Substantial income tax benefits.