Abstract
The so-called life insurance marketing concept is generating a great deal of excitement among life insurance marketers. It's also received some skeptical reviews in the popular news media, the most recent being a Newsweek article by Jane Bryant Quinn in the April 4, 1994 issue. The marketing concept calls for electing an unreduced pension, that is, max~ imizing the pension, in lieu of electing a reduced contingent annuity (CA) or joint and survivor (J&S) option. Further, the marketing concept calls for the purchase of life insurance on the employee to substitute for the economic exposure created by not electing the CA or J&S option. Although the marketing concept is clear and simple, its economics continue to generate a great deal of discussion. This paper attempts to add some clarity to this issue. The differences between pension max and the CA option are examined in three parts: • Differences in the funding pattern • Differences in the benefit pattern • Relative economics. The paper concludes with some generalizations based on this analysis.
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