Do You Pay Taxes on Life Insurance Payout?

do you pay taxes on life insurance payout

There are so many questions about what taxes one must pay on life insurance proceeds. But one that we get a lot is, do you pay taxes on life insurance payout?  The subject can be a bit intimidating for a lot of people so we decided to put together a quick reference guide on how …

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The Life Insurance Loan Process: A Step-by-Step Guide

Step-by-step guide to life insurance loans

Life insurance loans, particularly from whole or universal life policies, offer a flexible solution for cash flow fluctuations. The process involves checking available cash value, determining the loan amount, requesting the loan, and repaying it without a fixed schedule or penalties.  Interest rates vary by policy and insurer, and loan terms are generally straightforward. Key …

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Dynamic Retirement Income Planning with IUL

IUL Retirement

Indexed universal life insurance has unique features that make it resilient when change becomes necessary. And a lesson all retirees will eventually learn is their plan during retirement will require adjustments. Today I want to highlight the versatility IUL retirement planning brings to a plan specifically focused on how the product accommodates changing needs over …

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Whole Life Insurance Dividend Options

Everything you need to understand about whole life insurance dividend options

Key Things to Know Whole life insurance dividend options provide policyholders with flexibility and versatility. The four original options are: receiving dividends in cash, using dividends to reduce or pay premiums, purchasing paid-up additions, and accumulating dividends at interest. Each option has its own tax implications and considerations, such as potential taxable income, impact on …

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Ohio National Whole Life Policy Historical Performance

Ohio National Whole Life Policy Historical Performance

NOTE: We originally published this blog post in 2021. At that time, Ohio National Announced it plans to demutualize and dramatically changed its dividend calculation for whole life insurance policy holders. Since then, the newly acquired company changed its name to AuguStar Life. The policyholder whose policy we used in this analysis decided to cancel …

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Paid Up Additions: The Magic of Cash Value Life Insurance

paid up additions add fuel to whole life insurance

The paid up additions feature of a whole life insurance policy is one of the most powerful components with respect to cash value accumulation.  Most whole life products have a paid up additions (PUA) feature, but they can all work a little differently so it's important to note that one company's approach could vary substantially from others.

But before we explain how they work…

What Are Paid Up Additions?

Paid up additions are available through a rider that is added to a whole life insurance policy. The PUA rider allows the policy owner to purchase additional paid-up insurance on their policy. That all sounds very technical, so let's explore what that actually means for you if you're looking at cash value life insurance (whole life in particular) and trying to decide if it's the right fit.

The PUA rider is the mechanism used to place additional money into a participating whole life insurance policy to increase policy cash value performance. Every dollar of premium that is allocated to the paid up additions rider creates a small paid up insurance policy that has its very own cash value that is created immediately. In general, whole life insurance policies that have a substantial portion of the total premium allocated to paid up additions will outperform those that do not take advantage of PUAs.

There are also various paid-up additions options available from each insurance company. It may all seem complicated but hang in there, we're gonna explain it in multiple ways and provide examples to illustrate how it works.  We want to help everyone understand paid-up additions and their application to life insurance policies.

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Investment Grade Life Insurance?

Investment grade whole life insurance

Key Things to Know The term “investment grade life insurance” is a marketing tactic used by agents to sell whole life insurance policies.  While some whole life policies may be better suited for cash value maximization, there is no official designation for “investment grade” life insurance.  Ultimately, it’s important to understand that “investment grade life …

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Is 10 Pay Whole Life Insurance Any Good?

10 pay whole life insurance may not always be the best options for building cash value

Key Things to Know 10 Pay Whole Life Insurance is a policy that guarantees a death benefit after 10 years of premium payments, making it a cost-effective option for those prioritizing a guaranteed death benefit. While it offers a lower total cost for a guaranteed death benefit compared to longer-term policies, it may not be …

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What is Dividend Paying Whole Life Insurance?

Key Things to Know Dividend-paying whole life insurance, or participating policies, share in the insurance company’s profits, potentially increasing the policy’s cash value and death benefit.  Factors influencing dividend payments include the company’s profitability and policyholder choices regarding dividend options. While dividends are generally tax-free, withdrawals may impact the policy’s overall value. Dividend-Paying Whole Life …

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