Tax Exempt

“Tax Exempt” Life Insurance Policies

Those looking to accumulate money utilizing a Tax Shelter, or Deferral Mechanism, may wish to explore the benefits derived from a “Tax Exempt” Life Insurance Accumulation Plan. It should be noted that a substantial portion of the income from such investments is accumulated free of tax. This allows utilization of an income stream from the residual proceeds.

The balance is payable to the beneficiary on a tax exempt basis at death. Tax may be payable if the insurance policy loses its “tax exempt status” or is surrendered early. Assuming tax can be avoided or grandfathered, these policies may be a powerful method, of accumulation particularly when other tax preferred investments have been eliminated.

“While numerous sophisticated investors have in the past scorned the use of Life Insurance Policies. The new insurance environment allows options in light of the new, preferred exempt tax rules. While it may not have the emotional attraction of real estate or stock market investments, the After-Tax Return and the timing attractions of the pay-off suggest an enhanced role in Tax Planning, Retirement Planning and Estate planning in particular.”

Money is accumulated with a positive result when you do not pay tax on growth. If the money is not used during the lifetime of the plan owner, the cash and death benefit can be transferred, exempt of tax & probate fees at death.