Death before retirement: the difference between an active and inactive saver
If someone dies before retirement age, the type of pension product and the saver's status determine whether the family receives a monthly pension or the accumulated money as a lump sum. On this page, we will understand the difference between an active and inactive saver, what happens in each pension product, and why it is important to update beneficiaries and preserve insurance coverage.
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During our working years, we accumulate a significant sum. It is important to know that the rules governing what happens to the money after death differ dramatically among product types — pension fundA savings vehicle based on mutual risk sharing that includes insurance coverage in cases of disability or death., Bituach MenahalimA savings product based on an individual contract between the saver and the insurance company, combining a savings component and insurance coverage. (ביטוח מנהלים; managers' insuranceA contract under which an insurance company undertakes to compensate the insured in the event of damage in exchange for a periodic payment.), and Kupat Gemel (קופת גמל; provident fund) — and according to the saver's stage, before or after retirement.
This is one of the most critical concepts to understand because it determines whether the family receives a monthly pensionThe monthly amount paid to the saver in retirement, calculated by dividing the amount accumulated by a "conversion factor." or only the accumulated amount.
What will the family receive?
Active saver versus inactive saver
| Status | What will the family receive? |
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