Are Life Insurance Policy Loans Taxable?

Life Insurance Policies are another way to accumulate tax deferred wealth and it is possible to borrow against the cash value. But are Life Insurance Policy Loans Taxable?

A permanent life insurance policy has the added feature of accumulating a cash value over the life of the policy. This cash value can be used as security for a Life Insurance Policy loan. It is considered as security for the loan because it does not negate the coverage afforded by the policy as long as the loan is repaid. This fact impacts the taxation picture because it means that you are not actually receiving a distribution of the cash value.

Although the premiums paid on Life Insurance Policies are not allowable as a tax deduction, the earnings in the policy are not taxed either. In this manner, the policy acts similar to other forms of tax shelters such as IRA or 401k retirement accounts. Also, the death benefit that would be paid to your beneficiary upon your demise is normally not subject to taxation either. However, should you surrender your policy and take the cash value, the proceeds above the amount of your premiums would be subject to taxation.

If you borrow against the cash value of the policy, however, it is not really a distribution. It is not considered income because the amount will have to be paid back eventually and also you will have to pay interest on the loan. Many people fail to understand this principle and feel like they are borrowing their own money and wonder why they are paying interest.

The answer is that they are not borrowing their own money at all. Their money is still in the Insurance Account and still performing the intended function of providing security in case of the death of the policy owner. It would also still be accumulating earnings in accounts where the cash value is invested. It is not considered income anymore than a Mortgage loan or auto loan would be considered income for the purposes of taxation.

If failure to repay the loan leads to a lapse or cancellation of the policy, this will have tax implications. Since the cash value of the policy would, in a sense, be used to repay the loan, the amount paid would be considered income as would any additional funds distributed upon the surrender of the policy. Life Insurance taxation issues are even more of a minefield of complex regulations than even the norm for other types of investments. You are going to need to touch base with your tax expert and Insurance Agent to navigate this minefield successfully.

Barry Waxler provides financial planning in San Diego through UFCAmerica.com.

Life Insurance Policies are another way to accumulate tax deferred wealth and it is possible to borrow against the cash value. But are Life Insurance Policy Loans Taxable?

Tag: life, insurance, policy, loan, loans, tax, taxes, taxable, benefit, benefits, proceed, proceeds, irs

How To Compare Low Cost Health Insurance In Connecticut

Connecticut residents need to keep a few things in mind when they are comparing their low cost health plans. It’s best to pick a plan that will fit your lifestyle. Here are a few things to consider:

1.Alternative care: If you find that you infrequently go to a medical doctor and prefer to go to an acupuncturist or a chiropractor, make sure you select the plan that will accommodate your wishes. Many plans will only allow a few visits to alternative care practitioners. Let’s face it, your practitioner knows which insurance companies are the most receptive to alternative care. Make sure you get advice from your practitioner as to which companies to select from

2.Keeping the same doctors: Do you have special medical needs that are treated by a doctor that you’ve developed a relationship with? It takes years to build a doctor patient trusting relationship. If you value your relationship with your doctor, you should obtain a listing of insurance plans that your doctor accepts. Those companies are the ones you should use when shopping for low cost health insurance

3.Out of Pocket Expenses: Can you handle large co-pays and high deductibles? Usually the lower your co-pay, the higher your premium and visa versa. Determine how much you can afford to pay out of pocket.

4.Pre-Existing conditions: If you are currently being treated for a particular illness or condition, you might have to continue with your current insurance company. Many insurance companies will not provide coverage for pre-existing conditions.

5.Children: If you don’t have children and are not planning to have any, then coverages like pediatric care and pre-natal care is not of a concern. However, if you have children or are thinking of having children, check with your pediatrician as to which insurance companies he/she accepts.

6.Shop Around: The key to getting the best possible price on health insurance is to get alternative quotes and compare.

My recommended sites here: Low Cost Health Insurance in Connecticut Instant Health Insurance Quotes Online

Connecticut residents need to keep a few things in mind when they are comparing their low cost health plans. It’s best to pick a plan that will fit your lifestyle. Here are a few things to consider:

1.Alternative care: If you find that you infrequently go to a medical doctor and prefer to go to an acupuncturist or a chiropractor, make sure you select the plan that will accommodate your wishes. Many plans will only allow a few visits to alternative care practitioners. Let’s…

Tag:

Six Best Ways to Lower Your House Insurance Rate

Looking to lower your house insurance rate? Here are the six best ways to do it.

1. Compare Rates. Because insurance rates can vary by hundreds of dollars from company to company, the most cost effective way to lower you house insurance is to compare rates. You can do this by calling local insurance companies on the phone, but it’s far easier and much quicker to go to an insurance comparison website.

At these sites you fill out a simple form with information about the type of home you own and the amount of insurance you want. Then all you do is wait for your quotes and choose the best one.

Some comparison sites offer an online chat feature that allows you to talk with insurance experts on line so you can get answers to your insurance questions. (See link below.)

2. Increase Your Deductible. By increasing your deductible (the amount you pay toward a claim before your insurance kicks in), you can save 10% to 50% on your yearly premium. Just make sure you can afford the higher deductible should you need to file a claim.

3. Consolidate Your Policies. Purchasing both your homeowners insurance and your auto insurance from the same company can save you 10% to 30% on your yearly premium. You’ll also only have to deal with one company.

4. Add Safety Systems. Insurance companies will give you a discount on your insurance if you add safety systems such as smoke detectors, fire alarms, fire sprinkler systems, and fire extinguishers. This will also make your home a safer place to live.

5. Install Security Devices. You can get discounts on your insurance if you install security devices like dead-bolt locks, window locks, security lights, and burglar alarms.

6. Request Discounts. Insurance companies offer numerous discounts you may not be aware of such as senior discounts, non-smokers discounts, law officer discounts, military discounts, and others. Before you purchase your homeowners policy, ask your agent about all the discounts his company offers and take advantage of the ones you’re eligible for.

Visit http://www.LowerRateQuotes.com/homeowners-insurance.html or click on the following link to get house insurance rate quotes from top-rated companies and see how much you can save. You can get more insurance tips in their Articles section.

The author, Brian Stevens, is a former insurance agent and financial consultant who has written a number of articles on getting cheap house insurance rates.

Looking to lower your house insurance rate? Here are the six best ways to do it.

Tag: cheap house insurance rate