Though there are several reasons why you should get life insurance, the most attractive quality is life insurance is tax-free! Therefore, when the policy is finally used, whether it’s as a death benefit or as income replacement, your life insurance is tax-free! Watch the video below to learn more!
Tax-Free Death Benefit
With life insurance, you pay a small premium for a policy. For instance, you buy a million-dollar life insurance policy. Then, you’d pay the life insurance company $100/month in premium for that policy. Once you die, your family gets a million dollars, which is tax-free. In the end, you paid only a few hundred dollars in premium or maybe even a few thousand dollars in premium over your lifetime, and now your family gets a death benefit worth a million dollars tax-free. That’s the best part about life insurance.
Tax-Free Retirement Funds
Furthermore, life insurance can be an income replacement for retirement. You can buy what’s called cash-value life insurance. This means that a portion of your premium goes into a cash account, which grows at a safe conservative interest rate. The interest could be three percent, four percent, or five percent. Ultimately, it’s better than putting the money in the market because there’s no risk with a life insurance policy. Though you may not get a 34 percent like you would in a market, a cash-value life insurance policy is safe.
More importantly, the life insurance company guarantees your policy in full, and you can use it for supplemental income during your retirement. Again, life insurance is tax-free. So unlike a 401(k) or an IRA, which are both tax-deferred, the government can’t apply taxes to the policy. So if you did purchase the million dollar policy, then you’ll get the million dollars when you finally use it.
Since insurance is oftentimes overwhelmingly confusing, we want to shed light on this industry by answering YOUR questions. So if you have any questions or concerns, comment below and your question may be the topic of our next video!
Get Affordable Life Insurance Quotes by Clicking Here!