Get Universal Life Insurance To Provide For Your Loved Ones Tax Free

For some reason lots of people give life insurance a bum rap. Although it's often been disdained and maligned, it is actually one of the most unselfish things someone can do to protect their family, spouse, or business partners.

To put things in perspective, most people tend to collect assets as they get older. The reality is the more assets they gather the less need they have for a traditional life insurance policy. However there is a price to pay for your assets - taxes. And there are now a number of attractive insurance products that focus on helping you build your cash in a tax sheltered environment.

One of these products is universal life insurance. If you are debt free and have maximized your retirement savings plans - 401-K, pension, IRA, etc. - then this is one product that merits your consideration.

Are You Receiving Investment Income?

If you receive investment income you know that a very high percentage of that money usually goes towards income tax. And if you earn interest income you are well aware that it is being taxed at the highest possible rate.

If you're concerned about your guaranteed investment contracts (GICs) you can rest assured knowing that it's possible to hold them within your universal life insurance policy on a tax sheltered basis. In addition you can use one of the indices to outside indicators, such as the S&P 500 index, or the Morgan Stanley Capital International World Index, or even a combination of indices.

Are There Limits On Deposits?

There are limits on the amount of money that you can deposit into your tax sheltered universal life insurance policy. However there are a number of ways you can affect these limits.

First of all, the limits are primarily determined by the size of the plan you decide to buy.

In addition, should the investment component exceed the limit set by the government it is possible for you to buy the policy on the side by increasing the face amount of your policy, stopping any additions to the policy, or making withdrawals.

A universal life policy is a rather complex product and you should seek professional advice before going ahead. With that in mind, here's an example of what a policy like this might offer you and your loved ones.

For the sake of illustration, let's presume you and your spouse are sixty-five years old and don't smoke. Also, you are interested in creating a $3,000,000.00 tax free estate. It can be done if you deposit half a million dollars into your plan and use a rather reasonable 7% interest rate assumption.

Your money will be tax sheltered as you deposit $100,000 per year over the next five years into your plan.

Upon your demise your universal life insurance policy will pay out $3,000,000.00 tax free to your beneficiaries. This will give you the flexibility of leaving your taxable assets to the charities of your choice - on a tax free basis - while simultaneously leaving your children your tax free insurance policy. In other words, the charities win, your children win, and the government gets nothing.

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