Personal Financial Security - Life Insurance As A Long-Term Asset Class

Wednesday, February 12, 2014

by David Wexler

This is part 2 of a series. View part 1 here.


As tax rates on individuals and trusts increase, people are looking to life insurance as a tax preferred asset accumulation vehicle. 

Life insurance is treated differently than other asset classes for tax purposes.  Some of the tax treatment advantages include:

  • the annual increase in cash value is income tax deferred
  • a withdrawal of cash value is tax free up to basis
  • policy loans are generally income tax free
  • the death benefit is income tax free

Depending on the type of policy it is possible to do a tax free exchange of the accumulated cash value for an annuity that provides lifetime income. 

Determining the best design and most suitable product for a client’s objectives is a process.  For those looking to shield investments from current taxation or for a non-qualified vehicle to accumulate supplemental retirement income, life insurance may be worth looking at.

Please contact David Wexler, CLU, ChFC, AEP to find out more about planning for Personal Financial Security.


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