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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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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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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Why Paid-Up Additions Matter

If I had to pick one, and only one, additional feature of whole life insurance, it is hands down the paid-up additions feature.  Even if I lose the ability to blend death benefit, if I still have the PUA feature, I’m in a position to augment policy value.  This very special aspect of whole life …

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Tax-Free Wealth: Muni Bonds & Life Insurance Strategies

Building a substantial wealth portfolio involves strategic planning and understanding of various financial instruments. Tax-free wealth strategies are essential to this planning, offering avenues to grow your investments while legally reducing taxes. By employing tactics focusing on tax-exempt securities such as municipal bonds and considering life insurance policies with cash value components, you can enhance …

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How Life Insurance Companies Master Diversification in Asset Management

diversification by life insurance asset managers

In today’s fast-paced and unpredictable financial landscape, managing risk and achieving consistent returns is more important than ever. Life insurance companies have emerged as experts in this field, utilizing their vast resources and expertise to create well-diversified investment portfolios that deliver long-term value to policyholders. In this article, we will explore the factors that contribute …

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