How Can Whole Life Insurance be a Safety Net While Alive?

Hi Tiffany:

Whole Life is a specific form of Life Insurance. While Permanent Life Insurance is not a product but describes products that can include policies such as Whole Life, but also may include other policies such as Universal Life, Variable Life, Surivivorship Life, as well as others. All permanent forms of Life Insurance have similar or identical tax rules. They grow tax deferred, The death Benefit is income tax free. And withdrawals made up to the policies cost basis are received income tax free. Loans can be taken on the policies that will allow funds in excess of the cost basis to be withdrawn tax free. However caution about how much to borrow and keeping the policy in effect need to be taken into consideration when borrowing. Each policy and fact pattern needs to be understood before action is taken so to avoid any negative results.

As for your tax question the Life Insurance can be a very good savings plan, the cash value grows without taxation. The death benefit can be received tax free by the beneficiary. Income can be taken out of the policy without taxation as long as caution and certain guidelines are utilized, such as not withdrawing to much money, thereby risking the policies viability to stay in effect throughout the insured owners lifetime. The danger is if you end up surrendering the policy, that you made a profit on. If you did so, the gain would be taxed at ordinary income tax levels. This is the same regardless of which form of Permanent Life Insurance you choose.

If I can be of addittional help. Call me. I would be happy to try to help you. Also there is some articles on the site that I would suggest you to read regarding your questions.

https://whywholelife.com/life-insurance-asset-class-for-troubled-times/

I hope this helps.

Sincerely,

Michael Fliegelman