Those of us in the life insurance business know that life insurance is so basic and foundational that we must never stop asking this one question. In fact, life insurance is so fundamental to our country’s economic health that the U.S. tax code encourages its purchase.
That’s a powerful endorsement of the value we bring families.
Life insurance protection is the foundation of a family’s future, providing cash exactly when it is needed most to:
A life insurance policy offers benefits no other financial vehicle can offer because of its tax favored status, its flexibility, and the leverage and liquidity it provides families. At the same time, life insurance can be complex and clients and their other financial advisors would be wise to seek the help of a life insurance specialist to navigate the complexity and deliver simplicity to the process of purchasing a policy, or exchanging or transferring an existing one. Here are 10 things not to do with a life insurance policy:
Listen to this…
In 2016, Northwestern Mutual conducted a research study exploring attitudes and behaviors of Americans toward money, financial decision-making and issues that impact long-term financial security in American culture. The study surveyed over 2,600 Americans ages 18 and older.
Employers own life insurance policies on the lives of their employees for various reasons. Often it is to informally fund a non-qualified benefit plan for key employees. Other times it is used to facilitate the transfer of the business at the unexpected death of a key person, another owner, or a shareholder.
Although new rules for employer-owned life insurance policies (EOLI) went into affect over a decade ago, many financial professionals are unfamiliar with them. The rules have been included as part of the provisions of IRC §101(j) and apply to all policies issued after August 17, 2006. If they are not complied with, the life insurance proceeds at death will be subject to income taxes.
The IRS issued proposed regulations—all 189 pages– to clarify some of the complexities of its new §199A rule established under the 2017 Tax Act (Tax Act). Practitioners such as CPAs and attorneys, as well as the American public, can make comments over a 45-day period, after which the IRS will assess the comments and finalize the rules.
For a brief overview of §199A, see Highland Capital Brokerage blog articles 2017 Tax Act: An Overview Part 1 and 2017 Tax Act: An Overview Part 2
Although it will take time to digest these proposed regulations, there are 5 take-aways we can share right now. Stay tuned for a more in-depth summary.
We are over halfway through 2018 and financial advisors are well advised to start scheduling appointments post-haste with their upper net worth and higher income clients to discuss year-end planning affected by the 2017 Tax Act rules.
Here are the Top 3 Reasons to schedule client meetings right now:
