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Tom Meaglia, ChFC®, AEP®,
CLU®, CRPC®, MSFS
Chartered Financial Consultant
Investment Advisor Representative
Chartered Retirement Planning Counselor
CA Insurance Lic. #0567507
Meaglia Financial Consulting
2105 Foothill Blvd., #B140, La Verne, CA 91750
Toll Free: 800-386-3700
Bus: 909-593-6105
Cell: 818-681-8600
Fax: 909-593-6120
Email: tom@meagliafinancialconsulting.com
Website: www.meagliafinancialconsulting.com
Life insurance is a crucial element to most personal risk management strategies, but it can also be one of the most tax-efficient vehicles in your financial toolkit. The following examines how life insurance may affect your overall tax picture.
There are no tax benefits connected to premiums you pay for an individual life insurance policy, but you may owe income tax on employer-paid life insurance of more than $50,000 or if your premiums were tax-deductible. Beneficiaries may also owe income tax on employer-paid life insurance if any cash value increased the death benefit.
However, death benefits are typically income tax-free to the beneficiary in most instances, and cash value (in those policies that offer it) grows tax-deferred. Dividends, which some life insurance policies pay when expenses are lower than anticipated, also don’t trigger taxes. Dividends are not guaranteed. There are a number of ways that cash value and insurance surrendered during your lifetime can have tax consequences, so work with your financial and tax professionals to make sure you don’t trip over certain rules.
True, the federal estate tax exemption amount has increased markedly to over $11 million (over $22 million for couples filing jointly) in recent years, affecting only a small percentage of Americans. But some states that levy estate and inheritance taxes have much lower tax thresholds.
If you use a life insurance trust to buy and own life insurance (with the help of an estate planning attorney), you can help shield loved ones from estate taxes on the death benefit, no matter how much it is.
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Thomas Meaglia is an Investment Adviser Representative of Coppell Advisory Solutions LLC, dba, Fusion Capital Management, a registered investment adviser that only conducts business in jurisdictions where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting.
Insurance and annuity products are not sold through Fusion Capital Management. Fusion does not endorse any annuity or insurance product, nor does it guarantee any insurance or annuity performance. Annuity and life insurance guarantees are subject to the claims-paying ability of the issuing insurance company. If you withdraw money from or surrender your contract within a certain time after investing, the insurance company may assess a surrender charge. Withdrawals may be subject to tax penalties and income taxes. Persons selling annuities and other insurance products receive compensation for these transactions. These commissions are separate and distinct from Fusion's investment advisory fees.
Meaglia Financial Consulting and LTM Marketing Specialists LLC are unrelated companies. This publication was prepared for the publication’s provider by LTM Client Marketing, an unrelated third party. Articles are not written or produced by the named representative.
The information and opinions contained in this web site are obtained from sources believed to be reliable, but their accuracy cannot be guaranteed. The publishers assume no responsibility for errors and omissions or for any damages resulting from the use of the published information. This web site is published with the understanding that it does not render legal, accounting, financial, or other professional advice. Whole or partial reproduction of this web site is forbidden without the written permission of the publisher.