Markets and Uses for Universal Life Insurance When people think of life insurance, they generally automatically assume it is only for end of life monetary benefits to their loved ones in the event of their passing. Although the primary purpose of life insurance is to pay out a death benefit to your family, it can be used for other things. In fact, when set up correctly, life insurance can be an investment vehicle that provides...more
Characteristics of Single Premium Life Insurance When people think of life insurance, they typically do so in terms of the monthly payments they have to pay over the time frame relevant to the type of insurance they want to purchase. This is generally because most people do not have significant savings, especially the young, and must rely on their monthly income to finance such a large investment. But like many other large...more
Defining Life Insurance for Taxation Purposes Life insurance is not only a great idea for future planning. It is not only a great idea for investment purposes. It is one of the best ways to shelter yourself from taxes. The money inside a life insurance policy is not taxable. Even if you use the money inside the policy to invest, you will not have to pay taxes on it. You will not have to pay taxes on the returns you get either, as long as they stay inside the policy. Dividends earned, returns made, and loans that come out of the insurance are not taxable inside the policy.Dividends are offered on some types of life policies. Many allow you to stipulate how you want to use those dividends. You can get them as a check in the mail. You can set up your policy to use dividends to go toward your premiums or toward supplemental insurance. You can get dividends to be added to any investing that is going on within your policy. As long as the dividends stay inside the policy, they are not taxable. You are not required to report these dividends as income as long as they are sheltered inside the policy. Returns on your investments made as a part of a life insurance policy are...more
Characteristics of Variable Life Insurance Products Although variable life insurance products pay out a death penalty when the policy holder dies, it can actually be looked at as more of an investment vehicle for your cash. Part of the premiums you pay for your insurance can be reallocated to other accounts that allow you to earn...more
Corporate-Owned Life Insurance The death of a key employee in a business represents a terrible loss to the corporate family. It can also cause considerable financial loss particularly if the person was a significant owner in the business or was in a position that requires considerable time, effort, and expense to recruit a...more
Life Insurance Tax Treatment No matter what you do, you can't get away from having to pay taxes. This even includes the payout from a life insurance policy. There are a few different ways that the proceeds from a life insurance policy are paid out and each has an accompanying tax situation that must be handled. The policy itself has tax benefits and consequences. Although the premiums paid to a life insurance policy are paid with after tax funds, the premiums cannot be claimed on your taxes. However, interest earned on the cash benefit of a particular insurance is tax deferred until the death benefit is paid out or the money in the policy is otherwise withdrawn.Generally, money from the policy that paid to the beneficiary because the policyholder died is not subject to federal taxes. However, the cash given may be subject to estate taxes as part of the estate you are leaving behind to your heirs. So even though the amount of money left to your heirs may be well under the allowed non-taxable amount, if the amount of the policy pushes it over them limit then your heirs will have to pay estate taxes on everything. For example, if your estate is $500,000 but the...more
Evaluating Life Insurance Needs People tend to put off buying life insurance. The main reason may be that they do not want to think about their death. More often than not, though, it is also that they do not know how to evaluate their...more
Term Life Insurance - The Pros and Cons A life insurance policy means that an individual has an immediately established estate to leave to their beneficiaries once they pass away. It is of particular importance for the person in a...more
Types of Life Insurance - Are They All The Same? Life insurance is a tool that many people use to provide a healthier or more robust estate for their beneficiaries. There are a number of different types of life policies available but...more
Death Benefit Proceeds of Life Insurance - Distribution and Taxation! The taxable nature of death benefit proceeds from life insurance is something that most people do not have a clear understanding of. Most people believe that the...more
Choosing the Right Life Insurance - Making the Best Decision Choosing the right type of insurance policy to meet your needs requires you to have a clear purpose in mind for the policy. If you are interested in simply covering whatever...more
Investment Through Life Insurance - The Basics A life insurance policy can go well beyond simply providing for the beneficiaries of the policyholder after their passing. The right type of policy can actually act as a vehicle for...more