Tax Planning with Life Insurance
Life insurance can help you achieve various goals. Tax planning with life insurance involves minimizing the tax consequences of your life insurance decisions. Tax planning vehicles involving life insurance will vary, depending on the form of insurance coverage you select. In order to make informed insurance tax planning decisions, you must understand topics such as the tax-deferred buildup of cash value, the taxation of withdrawals, proceeds, loans, and dividends, and the deductibility of premiums. In addition, your insurance tax planning should involve a general understanding of the advantages and disadvantages of straight life insurance, modified endowment contracts, personal life insurance trusts, business use of life insurance, and life insurance as a part of a plan for charitable giving.