Did you know your life insurance policy may be subject to a variety of federal income taxes upon disbursement to your beneficiary? Many individuals are not aware of the fact that although most benefits are considered tax-free, a pay-out may be included as part of your estate in order to fulfill real estate tax regulations. There are several important considerations regarding taxes and life insurance benefits which you should consult with your tax advisor regarding your specific situation.
Choosing your spouse as your beneficiary will not cause a tax to be imposed on the life insurance payout; however if you decide you want your beneficiary to be someone other than your spouse, you will want to make someone else the trust of your policy so that you are not considered the owner of the policy. Doing this ensures that it won’t be counted as taxable estate property. To find the best online life insurance rate for this type of life insurance, search among the many internet sites offering various policies which will suit your needs.
Life insurance which is considered part of the deceased estate is also subject to being taxed, but the estate value and the insurance policy has to be less than $ 3.5 million. Otherwise, a 45% tax rate will be imposed on the estate by the internal revenue service. In order to bypass an estate tax being imposed on their life insurance a policy holder can sign their policy over to someone else. However, if this transfer of a life insurance policy is not completed at least three years before the death of the policy owner, the policy’s cash value will automatically be assessed as property of the estate and therefore subject to tax.
You can easily find insurance life quotes by researching life insurance on popular websites such as http://www.findourlifeinsurance.com, which provides free quotes and information to help consumers make informed decisions about life insurance. These sites can link you to an agent which you can email or call a life insurance agent.
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