Whos the permanent life insurance for?
Permanent life insurance policies enjoy favorable tax treatment. The growth of cash value is generally on a tax-deferred basis, meaning that you pay no taxes on any earnings in the policy so long as the policy remains active. Provided you adhere to certain premium limits, money can be taken out of the policy without being subject to taxes since policy loans generally are not considered taxable income.
People who… • May need life insurance for a long term. • May be interested in accumulating policy cash value to provide funds for education, retirement or other future goals. • Want to take advantage of the tax-favored treatment of cash value life insurance policies. Benefits: • Over time, permanent insurance may be more economical than term insurance since premiums do not increase with age and the policy can build a cash value. • Earnings, and certain withdrawals and loans, may qualify for tax-favored treatment. • Policy loans and withdrawals provide access to your cash value. • If you cancel the policy, the accumulated cash value is yours to use as you wish. Surrender charges and taxes may apply. Some Drawbacks to Consider: • Permanent insurance is initially more expensive than term insurance. • Loans, withdrawals, and any unpaid loan interest generally reduce the death benefit, which could leave beneficiaries inadequately protected.
