Israelis Can Opt Out of Survivor Benefits to Boost Retirement Savings

New pension funds in Israel are structured with three components: retirement savings, disability insurance, and survivor benefits, which provide income to a family if the insured individual dies. Most employees contribute to all three monthly, even if their family situation no longer necessitates full coverage. For instance, a 49-year-old single individual without children can request to waive the survivor benefit coverage from their pension fund. The funds previously allocated to this coverage would then be directed to their retirement savings, continuing to accrue returns until retirement. Survivor benefits typically go to a spouse or children under 21, or older children with disabilities. This means divorced individuals or widowers whose children are adults may also be eligible to opt out, depending on the pension fund's regulations. The cost of survivor benefits varies based on age, insurance track, salary, and fund rules, but an estimated 80 shekels per month for a 49-year-old could amount to over 17,000 shekels saved over 18 years. With a 3% annual return, this could grow to nearly 23,000 shekels by age 67, potentially increasing monthly pension payouts. However, waiving coverage has implications. If an individual later starts a family, they must re-enroll, and pre-existing conditions may trigger a new five-year waiting period. Some funds offer an option to pay a small additional fee to maintain continuity of coverage. The waiver is typically valid for two years, after which coverage automatically resumes unless a new waiver is submitted. It is advisable to update the pension fund immediately upon changes in marital status. In cases where a policyholder who waived survivor benefits dies, the remaining funds in the pension component go to designated beneficiaries or heirs.