Alan Kaye Insurance Benefits
Alan Kaye Insurance Benefits
Additional benefits, such as tax advantages and long-term savings.
Alan Kaye The second tax advantage to keep in mind is that the total cash value for a permanent life insurance policy (i.e. whole or universal life) accumulates tax-deferred.
As a result, your cash value nest egg will grow faster because money is not being taken out for taxes.
In addition, when you access money from your cash value, in general you can withdraw an amount equal to what you have paid in premium payments without owing any taxes.
Life insurance policies can offer certain tax advantages. First, the death benefit is generally paid out to your beneficiary free of income tax.
Alan Kaye said Consequently, a sizeable death benefit will avoid a hefty payment of income tax. By contrast, most retirement plan proceeds received by beneficiaries will typically be taxed by the IRS.
And while life insurance death benefits are generally exempt from income tax, they are not generally exempt from federal estate tax.
However, you can establish an irrevocable life insurance trust (ILIT), which can exclude life insurance proceeds from the taxable estate and transfer the death benefit immediately to beneficiaries
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