Types of Cash Value Life Insurance

There are two main types of cash value life insurance: whole life and universal life. I have found that there is often some confusion, even among so-called experts, when it comes to permanent insurance (also called “cash value insurance”). I’ll do my best here to clear up the confusion and clearly explain the similarities and…

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Making Policy Loans and Withdrawals

Cash value life insurance refers to a wide variety of insurance policies that provide both a death benefit and a cash value component that may build tax deferred over time. Many cash value policies let you borrow or withdraw from the cash value. Making policy loans and withdrawals can sometimes be a good way to…

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Life Insurance Tax Traps for the Unwary

Life insurance has been recognized as a useful way to provide for your heirs and loved ones when you die. Lawmakers have long recognized the social significance of life insurance as a source of funds for widowed spouses and children, and have offered liberal tax benefits as an incentive to those who put their hard-earned…

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Understanding Insurance Company Illustrations

A life insurance policy illustration is a text-and-graphics presentation of how a life insurance policy will perform at a selected interest rate, with an assumed number of predetermined premium payments and a “current” and “guaranteed” cost of insurance and expenses. A life insurance policy illustration is not a legal document–legal obligations are contained in the…

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Life Insurance and Terminal Illness

If you are terminally ill, your life insurance policy is a valuable resource. Not only can you use life insurance to provide adequate income to your survivors for their short- and long-term needs, but you also may be able to receive a portion of the death proceeds from your life insurance before you die in…

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Strategies Using Life Insurance

What is it? Life insurance is not only about protecting your survivors in the event of your death. Depending upon the type of policy you purchase, it can also enable you to meet specific life goals: retiring comfortably, paying for your child’s education, accumulating wealth, and paying for estate costs. If you own a business, life insurance can even fund…

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Tax Planning Tips: Life Insurance

Understanding the importance of life insurance is one thing. Understanding the tax rules is quite another. As insurance products have evolved and become more sophisticated, the line separating insurance vehicles from investment vehicles has grown blurry. To differentiate between the two, a mix of complex rules and exceptions now governs the taxation of insurance products.…

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How Does Cash Value in a Life Insurance Policy Really Work?

When you own cash value life insurance, your premium payments are allocated three ways. First, a portion of each premium pays for the actual insurance costs. Like term insurance, a specific cost is associated with the policy’s death benefit, based on your age, health, and other underwriting criteria. Second, a portion pays for the insurance…

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