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 Posted: Tue Mar 18, 2008 7:29 am Post subject: A Community Think Tank: |
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| Someone please tell me when a life insurance death benefit is taxable as ordinary income? |
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InsInvestigator
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| Posted: Tue Mar 18, 2008 9:37 am Post subject: |
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Hi InsInvestigator,
Is a life insurance death benefit taxable under ordinary income head?
Never really heard of that..I have doubts!
Sincere thanks,
BandwagonBullpie
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BandwagonBullpie
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| Posted: Tue Mar 18, 2008 11:42 am Post subject: |
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Never ever heard of this | Quote: | | life insurance death benefit is taxable as ordinary income? |
However, if it's a policy that incurred interest or some kind of dividends that (part) is taxable...(going thru that with my mom right now...after my step dad's passing this last spring)...I've been dreading and dreading the tax's this year....my understanding the ''death benefit'' is not taxable any interest/earnings above the death/face value/benefit of course are...
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Lori
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| Posted: Wed Mar 19, 2008 5:16 am Post subject: |
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Here are a couple way a death benefit could be taxable.
When a policy is purchased by a company, such as for a buy-sell agreement, and the company deducts the cost of the insurance premium.
There is also risk of portions of death benefits being taxable by receiving and Accelerated Death Benefit.
Also, if you die owning a life insurance policy on your life, the death benefit becomes part of your taxable estate. If you turn over a life insurance policy to your children so that they own the policy, you can avoid having the death benefit included in your taxable estate. |
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MBTexas
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| Posted: Wed Mar 19, 2008 7:41 am Post subject: Good ploy! |
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Hi InsInvestigator,
I've been contributing to some corners of our guide section of late..n merely keeping a tag of whats happening here-n-there!
Just as I surf through..I do come across multiple views presented in the form of articles as well as FAQs...but got stumbled at some key FAQs yesterday...only to discover some key differences in opinions (which have been wholesomely supported with relevant materials). Just don't wanna break the ice right now! 
ArindamSenIndies |
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ArindamSenIndies
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| Posted: Wed Mar 19, 2008 10:43 pm Post subject: |
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Hello ArindamSenIndies,
Regarding any differences in opinion we might have in the Life Insurance Guide section. When I wrote those sections, I tried very hard not to impart any of my personal opinions about the many uses of insurance and the premises under which they are sold. This was done so that I could steer well clear of confrontations with, for example, people who think term insurance is the answer to everyone's insurance questions.
It was my goal to give only general information with, as you noted, enough information to substantiate it.
There are always going to be differences in opinions and, as an Insurance Fraud Expert, I look forward to it. The purpose of the Life Insurance Guide, however, was to help as many people as possible in the fewest number of words and/or pages.
Mark
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Please feel free to go to my website at www.markcolbert.com or, if you have a specific question, you can email me directly. I hope I can answer any questions you might have. If not, I can certainly find an answer right away. |
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InsInvestigator
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Location: Central California
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