Life Insurance Taxation Flashcards
Death benefits are…
Tax-free to the beneficiary
Dividends are…
Tax-free to the policyholder
Loans against cash value are…
Tax-free as long as they’re repaid
Cash value will grow…
Tax-deferred until accessed by the policyholder
Premiums on individual LI are…
Not tax deductible
Federal tax is due how many months after death?
9 months
Life insurance might be taxed if…
Deceased owned policy at death; deceased transferred ownership within 3 years prior to death; deceased’s estate is the beneficiary
Federal exemptions for estates valued below…
Approx. $11 million
LI Replacements might require new…
Contestability period, suicide clause, and evidence of insurability
LI replacements might require higher…
Cost due to age
LI replacements might create…
Coverage gaps and tax problems
LI replacements generally requires…
Various disclosures and signed statements
1035 Exchanges allow tax-free exchange of…
LI for LI, LI for annuities, annuities for annuities
1035 Exchange does not allow exchange of…
Annuity for LI
1035 Exchange does not allow who to change as part of the exchange?
Owner and insured
