Many insurance policies offer great tax benefits. One if the key benefits of a life insurance policy is that it is
distributed tax free. This makes it separate from the person’s estate and is not subject to estate taxes.
Unlike most retirement vehicles like stocks, bonds, Mutual funds and other vehicles, when the insured passes away, the proceeds are directed to the beneficiaries without any taxes taken out. There are no estate taxes that need to be paid to the government.
In addition to end of life benefits, many people utilize life insurance policies for living benefits as well. You can borrow against the cash value of the policy and receive tax and penalty free income. This is loan is paid back generally at the policy holders discretion. The money borrowed can be used for just about anything tax free. It can be used for college, building or improving a home, buying an automobile, even taking a nice vacation, all tax and penalty free.
Disclaimer: This is not to be taken for tax advice. That should be from your tax or legal professional.
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