Cash
Value Life Insurance Policy
In addition to the comfort of knowing that you have provided
for your loved ones after your death, there are several other
reasons you may want to consider life insurance, including:
-
If your policy has cash value, the cash value may be used to help with big-ticket items such as college education, traveling, or a down payment on a home. Most cash-value policies enjoy a tax-deferred status, meaning that you do not pay taxes on any cash value accumulation until you receive funds from the policy. And if withdrawn properly, you may completely avoid any taxation on the distribution.
- Life insurance can be used to pay estate taxes and funeral
expenses. If an individual dies in 2006 and his or her estate
is worth more than $1,500,000, federal estate taxes
at rates as high as 48% may apply, usually due
within nine months of death. So, even if you have
a substantial sum of money, life insurance can be a benefit.
The proceeds generally go directly to your beneficiaries
without going through the probate process.
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