How does it work?
Here is how life insurance can be used to maximize pension benefits.
1. The participant in the defined benefit pension plan purchases a life insurance policy to replace lost income after the participant dies. The death benefit should be an amount that can provide the spouse the  same monthly payment amount as the Joint and Survivor option. The spouse is named as the beneficiary of the life insurance policy.
2. Upon election of pension benefits at retirement, the Life Only benefit is selected rather than the Joint and Survivor benefit.
3. Upon death of the participant, the life insurance death benefit is paid to the spouse. The pension benefits stop.
4. The life insurance death benefit is then used to provide income for the surviving spouse.

Achieve financial security while maximizing your pension benefits 
Pension maximization using life insurance is a way to gain needed death benefit protection while helping you get the most out of your defined pension benefits. If you are a participant in a traditional pension plan (also referred to as a “defined benefit plan”), you have a plan that is designed to provide you with monthly income payments upon retirement. First, however, you must make an irrevocable choice. Typically, your employer will give you two options for how the benefits will be paid—Life Only Benefit or Joint and Survivor Benefit. The Life Only option pays you the maximum benefit, but upon your death, your spouse does not continue to receive payments. The Joint and Survivor option pays a reduced benefit, but your spouse will continue to receive benefits when you die. The pension maximization strategy using life insurance is designed to be a compromise between the two options. It allows you to receive the higher pension benefit while also providing funds for your spouse in the form of a death benefit.