Life Insurance is protection against financial loss that would result from the death of an insured. It is an essential part of a financial plan to help protect loved one financially with a death benefit. The goal is to provide a measure of financial security for your families and businesses.
- Life insurance provides an infusion of cash for dealing with the adverse financial consequences of the insured’s death.
- Cash values grow tax deferred during the insured’s lifetime.
- Death benefits are generally income-tax-free to the beneficiary.
- Cash value withdrawals are treated on a first-in-first-out (FIFO) basis, therefore cash value withdrawals up to the total premiums paid are generally income-tax free.
- Policy loans are income tax free.
- Death benefits may be estate-tax free if the policy is owned properly.
- A life insurance policy may be exchanged for another life insurance policy (or for an annuity) without incurring current taxation.
- A cash value life insurance policy may be thought of as a tax-favored repository of easily accessible funds if the need arises; yet, the assets backing these funds are generally held in longer-term investments, thereby earning a higher return.