Insurance Law

The policy also click here will provide the couple with tax-free retirement income from a cash-value component of online advertising the policy that grows based on an index’s performance, usually the S&P 500. Once the couple retires, they’ll be able to make withdrawals against that cash value, which are tax-free because they are considered “loans” that are deducted against the death benefit.

However, in this case, the strategy provided a major deduction on their company’s income, reduced the couple’s personal tax liability, and gave their retirement savings a boost. The click here adviser notes they also decided against buying that second home.

So many variables help determine the amount of life insurance you should carry. Do you want to fund your children’s college educations? How much money have you accumulated in savings, and how much of that are you willing to spend after one of you dies? Is there a home click here mortgage that you would like to pay off? If one of you dies, do you each earn enough to live comfortably on your own without the other’s income? If not, how much additional monthly income would the survivor need?

These plans make use of an IRS tax code that allows companies to take tax deductions on insurance premiums they pay on policies for employees. Those premiums count as part of an employee’s compensation, but they are assessed at a reduced tax rate.

For example, if you die, your husband might decide to work part time for a while to be there for the kids. Your life insurance could provide him with an income cushion. With plenty of life insurance, the kids might be able to choose better colleges or maybe go to grad school.

The couple’s business had a banner year, generating about $1 million in profits–much of which they planned to take as personal income.

IRS rules required that the company also offer their dozen employees $50,000 in group term insurance as part of the program, but the small premiums on click here those plans didn’t count toward the employees’ income. The employees could choose to add a permanent life policy similar to the owners’ policy. However, being taxed on those additional insurance premiums didn’t make sense for the staff.

Under Mr. Turner’s plan, the couple’s business purchased separate permanent life policies on the wife and the husband. The policies offered initial death benefits of $3 million and $5 million, respectively, and the premiums totaled $400,000 a year for five years.

Putting additional money into their retirement plans wasn’t a good option, because the plan structures required that they also contribute more to their employees’ accounts at the same time. That wasn’t the couple’s immediate priority. So Mr. Turner found a solution that specifically benefited them: a Section 79 insurance plan.