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Whole life insurance benefits those who choose to invest in their financial future. Still, diverting income toward another policy can be daunting for many people.
Despite this concern among the general public, many insurance marketing companies have observed a steady increase in purchasing whole-life policies, but what has changed? Specific tax policies motivate individuals to invest, finding unique benefits that have become worth investing in despite the cost.
As Christine Moreno of LifeInsurance.Agency claims, “We are seeing a revival due to the expected increase in taxes over the coming decades. If tax rates rise significantly, it makes the tax advantages of whole life insurance that much more compelling.”
What is whole life insurance?
The primary function of a life insurance policy is to protect loved ones in the event of an individual’s death, but there are many other forms that these policies can take as well. Whole life insurance is just one of these forms, specifically covering a person’s entire life rather than a portion or up to a point.
Whole life insurance is distinct in that it pays a tax-free death benefit, including a savings component in which interest is accrued on a tax-deferred basis. A whole life insurance policy requires regular payments in exchange for paying this death benefit to an individual’s beneficiaries.
A life insurance policy that grows in value
Rather than returns based on the performance of an insurance agency’s investment portfolio, whole life insurance policies grow your policy’s cash value at a steady rate backed by the insurance company itself. Additionally, many whole life insurance policies can be borrowed against cash value, acting as an extra resource to pay for emergency expenses without counting as a taxable income.
In this way, a whole life insurance policy can complement other retirement assets. That said, using a whole life insurance policy this way will reduce its later value and potentially cause the policy to lapse.
Tax advantages of a whole life insurance policy
As a policy, whole life insurance offers various tax advantages that complement other retirement assets. The death benefit is generally paid without being subject to income tax, in contrast to retirement plan proceeds that fall to beneficiaries.
This fact might not avoid hefty federal and state estate taxes, which is essential to remember. Rules and regulations remain subject to change, so even having a whole life insurance policy as a part of a larger portfolio of assets can benefit you in a general sense.
Consider LifeInsurance.Agency
Companies like LifeInsurance.Agency provide whole life insurance policies as a reflection of their dedication to helping individuals secure a financial future. In the event of an individual’s passing, a whole life insurance policy is one of the best policies to have already taken out. This life insurance policy’s unique tax benefits and investment potential have been drawing more and more attention from insurance marketing companies and future-conscious individuals, and it’s easy to see why.
