A white circle with a black border surrounding a chevron pointing up. It indicates 'click here to go back to the top of the page.' I'm a financial planner, and I almost always recommend the same type of life insurance to my clients Three evenly spaced dots forming an ellipsis: "...". Two crossed lines that form an 'X'. It indicates a way to close an interaction, or dismiss a notification. The author, CFP Natalie Taylor. Courtesy Natalie Taylor Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, but our reporting and recommendations are always independent and objective...
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How Life Insurance may help you escape the Death Tax An inside look at a wealth-transfer strategy your financial advisor may not know exists A tired old cliché says the two things you can’t avoid in life are death and taxes. It may be uninspired and a little depressing but, unfortunately, it’s mostly true. Americans are taxed for just about everything. And, if you have been fortunate enough to accumulate some wealth over your lifetime, you are even taxed for dying…the ultimate double whammy of the seemingly unavoidable. Luckily, exposure to the “death tax” doesn’t have to be completely terminal. If you have built up a good amount of assets in your Individual Retirement Account (IRA), you...
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OTTAWA, ON, Aug. 26, 2020 /CNW/ - The Canada Revenue Agency (CRA) is warning Canadians about getting involved in tax schemes involving leveraged insured annuity plans. Promoters, including tax representatives and tax preparers, are claiming that taxpayers can extract tax-free earnings from corporations or claim large insurance expenses using a leveraged insured annuity provided by supposed offshore insurers. Tax schemes are plans and arrangements that go against the Income Tax Act. They deceive taxpayers by promising to reduce taxes. Such schemes may promise large deductions or tax-free income. What is a leveraged insured annuity? A leveraged insured annuity (LIA) involves a limited...
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Life insurance has always been a popular investment avenue as the premium paid can be claimed as deduction from taxable income. Life insurance has always been a popular investment avenue as the premium paid can be claimed as deduction from taxable income and the proceeds, including bonus, are also tax-exempt. However, there are a few important things to note when it comes to taxes. Not all life insurance proceeds that you receive are tax-free, be it on maturity or surrender. Hence, to avoid unexpected income-tax consequences, it is important that you are familiar with rules on proceeds from insurance, whether on maturity or surrender. Before the changes in law with effect from April 1, 2003...
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Life insurance is a great way to wrap up any loose financial ends left behind after you pass. Life insurance can not only help cover your last expenses, but can also save your loved ones from having to pick up your final, potentially hefty tab. But do life insurance policyholders and their beneficiaries actually receive all the money they expect, or does Uncle Sam get first dibs on a huge slice of the pie? We’ll answer some common questions when it comes to taxes and life insurance, and hopefully clear up some confusion about where your money’s actually going. Our independent agent matching tool will find you the best insurance solution in your area. Tell us what you're looking for and we'...
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The answer is—it depends. Many people ask about life insurance and taxes. Let’s answer a few of the most common questions asked about taxes and life insurance. No taxes for most life insurance beneficiaries Your life insurance beneficiaries do not pay taxes on any death benefits in most situations when insurance is bought to meet personal and not business needs. This is one of the reasons why life insurance is often part of a financial security plan. Other tax considerations can arise when someone gifts the premium to insure another person. These events are not common, but they should be considered when life insurance is used for gifting. Interest as taxable income Any interest paid at...
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Maturing Life Insurance Policies Create Tax Bills, May Shortchange You Strategies to fix the problem. Permanent life insurance isn’t quite permanent. Many permanent policies mature at age 100, sometimes at 95, and then pay out the cash value to the policy owner. If you outlive your policy, you and your heirs can suffer adverse tax and financial consequences. After years of paying premiums for a policy you expect to remain in place until your death, you may lose the benefit of passing wealth to your heirs tax-free. Sometimes you won’t even get full value from your policy. And you’ll usually get a hefty tax bill too. It’s sometimes possible to extend a policy to age 120, and while this...
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Term Plan is a pure protection plan with assured life cover and no maturity benefits. It is an affordable insurance plan providing a large cover at a relatively smaller premium. A non-smoker male, 28 years of age, can get a term plan for a premium as low as Rs.576/month, for a 30-year policy term. While tax benefits should not be the primary driver for a term plan purchase, it is definitely agreeable that it is an efficient tax-saving instrument. The premiums paid as well as the death benefits are exempt under tax regulations in India. Benefits Under Section 80C The section 80C of the Indian Income Tax Act allows an exemption for life insurance premiums up to Rs. 1.5 lakh per annum. This...
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JOHANNESBURG – In this tax column, Piet Nel, head of the School of Applied Tax at the South African Institute of Tax Professionals (Sait) answers a reader’s questions about life insurance policies. Q: I am a South African living in New Zealand and still have life insurance policies in South Africa. My concern is that at the current rate of decline of the value of the rand, the value in New Zealand dollars will be very low. At present the value on death is approximately R1.9 million. Here are my questions: Do I leave my policy as is until my death? Or do I accept an early payout of about 60% and transfer the amount to New Zealand now? What would the tax situation be in both? A: We can’t...
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You don’t wake up every day thinking about life insurance, do you? In fact, months and even years can roll past without us even thinking about spending money on a policy. Then one day you find yourself seriously contemplating your mortality and the implications of leaving your loved ones behind in a sticky financial situation. That’s the day you decide to take out life cover. Now, the concept of life insurance is easy enough to understand. In exchange for a premium (usually paid monthly) your life insurer undertakes to pay out a sum assured, when you pass away, to beneficiaries you’ve nominated in your policy. Provided you’ve been honest and upfront about all your health issues when taking...
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