Using Life Insurance Tax Shelters
One of the top benefits of owning and maintaining life insurance is the tax shelter that it can provide heirs upon inheriting the assets of a policyholder. Using life insurance as a tax shelter is especially important for estates worth more than US $3.5 million, as any value past that is subject to a 45 percent tax by the government.
Since the value of an estate includes real estate, ownership of small businesses, and all investments, many more people may be subject to these outrageous taxes than they think. Whole life insurance is especially useful in providing tax shelters, and is one of the main reasons why it is so much more expensive than term life insurance as a whole.
Though the life insurance policy itself will add to the value of the estate, because of the investment portion of whole life insurance, you have the ability to grow the policy much more than would be taken away by taxes, and this is exactly why people choose whole life insurance as a tax shelter.
In order to best use life insurance as the most viable tax shelter, policyholders must invest while premiums are at their lowest. Using online life insurance comparison tools can be a great way to use a one stop shop and compare life insurance rates from several major companies.
Another great use of whole life insurance is the ability to draw upon the funds paid through premiums after just a few years. The IRS considers drawing upon these funds a return of capital, and so the withdrawal is also tax free.
To get the best life insurance rates on life insurance policies that will provide excellent tax shelters, the first step is to make use of the many free comparison resources online. With these various online life insurance quote sites, you can compare companies to each other and to the going market rates for people of your demographic.
The best life insurance rates are kept through continued research even after you have a policy to make sure that you always get the best life insurance rate. You should check the market at least twice a year to make sure that you are getting the best rate for your situation. You should also check your online life insurance quote sites if your life undergoes a serious change such as retirement, addition of a dependent, marriage, divorce, or employment change.
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