Is my Life Insurance Policy Tax Deductible?
There are parts of life insurance policies that do offer tax benefits. However, the premium you pay for your life insurance is not tax deductible (unlike some medical insurance premiums). The death benefit you receive from the insurance company is generally not taxed. This can change depending on if the policy is considered a part of an estate, which depending on the value of the estate can cause it to be taxed. Another potential tax benefit life insurance policies offer is in the cash value of whole life insurance policies. Whole life insurance policies accumulate a cash value. As long as you do not withdraw the cash from the policy, this value can grow tax-free until you withdraw it. If you wait until retirement to withdraw the cash, you will likely be in a lower tax bracket so you will keep more of your investment.
