What happens if the income tax law changes after the plan is established?
All representations are based on current income tax law, and it is obviously impossible to predict what changes may be made in the future. However, when previous changes have been made in life insurance taxation, Congress has consistently “grandfathered” existing life insurance policies. What if income tax rates increase after the plan is established? Any increase in personal income tax rates will actually increases the advantages of life insurance. That is because a higher portion of the benefits payable under the alternative programs will be lost to income taxaation, while those from the life insurance will continue to be income tax-free.
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