Tax Advantages of Cash Value Life Insurance in Retirement Planning
Life insurance is back in vogue as a mainstream of retirement planning. (Not the cheap term stuff, that's like crossing the Atlantic in a canoe.) Cash value life insurance, whether it be some variant of guaranteed whole life, or universal life, has incredible features. Here are a few when in comes to maximizing your income in retirement years:
Tax free income-- Congress is on the hunt for more tax money. All qualified plans are in play as a source for the tremendous U.S. debt and sustaining programs like social security, Medicare, and Medicaid. Low interest Loans on well funded life insurance are likely to remain tax free, as long as the policy is still in force. Taxing the policy loans would be tantamount to taxing a mortgage loan. Imagine that! It would kill the housing market. Taking loans on your policies generates zero tax reporting.
Loans as supplemental income from life insurance helps lower your taxes on Social Security. The average couple pulling in $4000.00 a month of of S.S. currently will have to pay tax on 85% of their S.S. Seems fair right? BTW, distributions from tax free bonds are still included in the calculation for S.S. taxation as provisional income. Ever hear of how people like Elon Musk can limit their reported income? They take loans against their assets which are income tax free. Now you get it.
The death benefit on life insurance is income tax free. There is nothing bringing more bang for the buck in transferring assets when you consider taxes. In case you have $$ dollars generating 1099's, capital gains, etc, and not quite sure whether you will need those to add to your bottom line income. If you can qualify, very difficult to to beat the ongoing tax deferral, accessibility, and tax free income transfer for heirs if needed.
Contact us to discuss if this and other techniques to maximize your Golden Parachute. Shouldn't you have one?
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