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- 19 things you did not know life insurance covered
- January 22, 2012 10:10 AM
Charitable donations. Life insurance can increase the amount of gifts given to charities. Life insurance proceeds can either be turned over to the charitable organization or the donor can add the charity as a beneficiary on the policy.
Gifts to individuals. If there is a person or cause you feel strongly about life insurance proceeds can be used to benefit anyone the policyholder/donor wishes. The recipient can be a beneficiary on the policy or the beneficiary of a trust funded by the policy’s proceeds. For example, if you have a friend or someone close to you who would like to start a non-profit organization or you would like to help their children attend college, you could designate this in the policy contract.
Supplement retirement income. Life insurance funds can be used supplement retirement income for the insured while they are alive or provide retirement funds for their surviving spouse. The funds can be used as a supplement to corporate pensions, IRAs, investments and proceeds from social security. Some policyholders use the cash value component of a universal life insurance policy to bulk up their retirement savings. They can also make cash withdrawals from the cash value without terminating the policy.
“Most financial advisors suggest that people utilize tax deductible retirement vehicles to maximize their income,” says Ashe. “This is especially true when it comes to life insurance. If you’ve paid $100,000 in premiums to a policy that has a cash value, you can withdrawal a $100,000 loan that isn’t taxable. Most policies with a cash value mature on a tax-free basis, which makes it an attractive supplement to retirement planning.”
Transfer of assets. Parents and grandparents can pay the premiums on policies owned by children and grandchildren with small gifts that qualify for the annual gift tax exclusion. According to the Internal Revenue Service, these items would be excluded from the gift tax.Pages: 1 2 3 4 5
· Gifts that are not more than the annual exclusion for the calendar year
· Tuition or medical expenses you pay for someone
· Gifts to your spouse
· Gifts to a political organization
· Gifts to qualifying charities can also be deducted from the value of the gift
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