The tax advantages of owning whole life insurance. Writing about taxes
is something that I tend to avoid simply because tax laws can change at
any time. I just don't want to mislead anyone, especially on such a delicate topic.
One thing that seems to remain constant is the relationship between taxes and the permanent life insurance policy...to be more specific the whole life insurance policy.
There is nothing more important than your family's security. What would happen to your family if you died? Would they be provided for? Compare Quality Quotes and Save up to 70%! The process is Fast, Easy and FREE. Get Quotes
The main reason for buying any life insurance policy is to protect your loved ones in the event of your untimely death. A whole life policy tends to fit the bill perfectly, even though it costs more than term insurance. There are certain tax advantages to owning such a policy that a purchaser should consider.
The Death Benefit
If properly set up the death benefit of your whole life policy is
paid to your loved ones free of income taxes. Your proceeds may be
distributed in a lump sum or in the form of a monthly income.
When writing the laws the lawmakers took into consideration that the proceeds of life insurance policies were paid to beneficiaries of a deceased breadwinner.
Huge chunks could have gone to pay taxes but I believe the choice was made to pay out the proceeds free of Income Taxes, as well as Federal Estate Taxes, so that things would be easier for the recipients...more often than not women and children.
Some consideration was also given to the owner of the life
insurance policy which in most cases is the one who earns the larger
portion of the family's income.
of life insurance accumulate interest over the life of the policy.
Dividends accumulate interest as well. Dividends are not guaranteed. The interest on both cash values and dividends accumulate free of income taxes.
The owner, premium payer, does not have the burden of additional taxes while the policy is in force. The taxes are paid when the policy is turned in to the company for its cash value.
Once your whole life policy has a cash value
the owner is allowed to take a loan from the policy within certain
limits. These loans are usually repaid over a period of time at a rate
that is comfortable for the owner of the policy.
If an insured dies before the loan is repaid the amount owed is usually deducted from the death benefit. Tax consequences may apply in this situation.
It used to be that the American people considered saving money
very important but things have changed. The percentage of people who
have significant savings is at the least bothersome.
Taking into consideration the tax advantages of owning whole life insurance allows you to see this type of policy in an entirely different light.
Whole life insurance can turn out to be a good vehicle through which to accumulate some cash. To say this is a great way to invest would be untrue but it can be a great way to protect your family.
Don't pay too much for life insurance! Shop and compare Quality Quotes from Quality Carriers first. Just answer a few quick questions then get your Quotes. The process is Easy and FREE. Click Here To Get Quotes
Life insurance hub is a service dedicated to assisting you in understanding life insurance quotes and how to apply them to your personal life insurance needs.
Death proceeds from 10 year life insurance can be in lump sum form or incomr form
The 5 year term life insurance policy has been around in insurance circles for a very long time. It can be sold as a policy or as a rider to a permanent life insurance policy.
The 20 year term insurance policy is one of the most sought after life insurance policies.
Take a look at 20 pay life insurance. Most people know that you buy whole life insurance if you want to be covered for the rest of your life even if you live to age 100.