Whole Life Insurance Policy Secrets
In whole life cash value policies, you have access to cash values throughout your life. These values will grow tax deferred while the policy is in force. Access to cash values up to the premiums you paid into these policies can be withdrawn, surrendered or borrowed tax-free. Loans from the policies’ cash values are tax-free as long as interest is paid. Loans for business purposes in these policies are tax-free and the interest can be tax-deductible.
Learning to use your life insurance policies can be beneficial, but BEWARE! Some “professionals” consider these policies easy pickings to surrender or strip the values out of them. Best if you check with us first for a second opinion on your life insurance.
BEWARE! IF AT ANY TIME, ANYONE RECOMMENDS THAT YOU DISCONTINUE A CASH VALUE POLICY, YOU MAY LOSE:
1. The immediate, income tax-free death benefit protection under current law;
2. The loss of the tax deferral features;
3. The death benefit, which can assist in meeting IRS demands on your estate;
4. The flexibility of a personal source of loans at a low cost;
5. A wealth accumulator, tax planner, a conduit for money, a source of flexibility,
security, and liquidity; and
6. Future accumulation of your dollars because surrender charges could apply to your
A Secret Weapon
When used properly, these policies are very valuable.
• Under current tax laws, a cash value policy permits tax-deferred accumulation of money. Under current tax laws, the IRS will impose no tax on this policy unless you surrender it or allow it to lapse. If you do so, they will tax the gains. The policy therefore can shelter you from taxes on any growth in the policy as long as it remains in effect.
• If your cash value has a waiver of premium and you become totally disabled by contract definition, the insurance company will make premium payments on your behalf to your contract. This will allow more freedom in how you use your discretionary funds for investment purposes.
• The cash in this policy is protected from creditors, absent fraudulent intent.
Always get a second opionion when making changes in your life insurance.