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 Posted: Wed Feb 11, 2009 9:54 am Post subject: Are life insurance benefits taxable at all? |
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Hi guys,
I guess all life insurance death benefits are non-taxable.
If it's like that then what are these life insurance taxes that I come to hear of?
Purpleheaded08
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Purpleheaded08
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| Posted: Wed Feb 11, 2009 10:21 am Post subject: Are life insurance benefits taxable? |
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| Quote: | I guess all life insurance death benefits are non-taxable.
If it's like that then what are these life insurance taxes that I come to hear of? |
Life insurance death benefits aren't taxed as income to the beneficiary; however, life insurance death benefits are included in a person's estate for Federal Estate Tax purposes.
Federal Estate Taxes is where the United States Government confiscates about 50% of the value of your estate because you died. That's the triggering event. Mom or Pops finally died.
This would be a great topic for The Financial Power Hour, click HERE to listen to promotional details.
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GarySpicuzza
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| Posted: Wed Feb 11, 2009 10:31 am Post subject: |
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| Quote: | | however, life insurance death benefits are included in a person's estate for Federal Estate Tax purposes. |
even though it is mentioned in the law,but all over the world the income coming from the death benefit of the person is not at all taxable;because the family has lost the earning member.
But what could be the reason for this exclusion of ''Federal Estate Tax'' law from this insurance law. 
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amit
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| Posted: Wed Feb 11, 2009 11:35 am Post subject: |
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| Quote: | | But what could be the reason for this exclusion of ''Federal Estate Tax'' law from this insurance law. |
Because the United States Federal Government says so!
But there are ways to mitigate this, first with an A-B Trust, if that's not enough with an Irrevocable Life Insurance Trust funded with a Second-to Die policy. That's when all the problems begin, when the "second" spouse dies.
No matter what the USA Gubment does the life insurance sector of the financial services industry has a solution.
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GarySpicuzza
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| Posted: Thu Feb 12, 2009 3:24 pm Post subject: |
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| Gary I rememner you were explaining this on another thread in detail. I myself found it to be really informative. Is there any chance you remember the thread and could direct Purpleheaded back to it? Also yes this would be an excellent topic for your radio show. Until I read the last thread on this topic you commented in I had no clue to any of this death tax stuff. I imagine there are plenty others that do not either. |
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fireyone
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jacksonfinancial
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| Posted: Mon Mar 02, 2009 12:57 pm Post subject: Are life insurance death benefits taxable at all? |
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hi there,
i too agree with amit, because life insurance is been insured so that after the insurees death, the loved one should not suffer any financial difficulties and because the only earning member have died, so it's not taxable as well.
Regards
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nail.ramp@gmail.com
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| Posted: Mon Mar 02, 2009 1:44 pm Post subject: |
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Hi jacksonfinancial,
It was really interesting to go through the explanation. Would you kindly explain the Split-dollar life insurance a bit further? I'm more interested to know on what basis the owner and the non-owner are chosen!
Roddick |
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roddick
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| Posted: Mon Mar 02, 2009 2:39 pm Post subject: |
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I'm not sure exactly what you are asking but I will try to answer.
In a spilt dollar arrangement there is a party who is paying all or a portion of insurance premiums and is able to collect the premiums paid upon the benefit being paid out. The person named as the policy owner is usually the owner and the non-owner is the person who is basically providing a loan to the owner. If two or more people are named as owners; usually the first person named is considered the owner. If they both have identical incidents of ownership then it would be considered two separate contracts and not a split-dollar arrangement. I hope that answers your question.
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jacksonfinancial
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| Posted: Mon Mar 02, 2009 3:17 pm Post subject: |
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| Quote: | | Split-dollar life insurance a bit further? |
split dollar insurance is primarily a contract between the employee and employer to share the cost as well as benefits of the insurance.
here is the example.
suppose a person is about 43-45 yrs old and want to have an insurance cover of $ 1 million.then the premium for it will come about $32000.Now the employee will pay the cost equivalent to the term insurance of the $ 1 million and the remainder is paid by the employer.
thumb rule is employee shares equivalent cost of the term insurance.Remainder paid by employer  |
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amit
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| Posted: Sat Mar 07, 2009 12:14 am Post subject: |
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roddick,
Split dollar is actually a lot more complex then the article implies. But to answer your questions the owner is usually and employee (or an employees trust) and the non-owner is usually and employer. |
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Marpol
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| Posted: Sat Mar 07, 2009 12:18 am Post subject: |
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| Also regardless what anyone would LIKE as Gary said life insurance death benefits are income tax free but can be included in an estate (unless prudent planning is done),which could be subject to estate taxes by the government. This is not an opinion this is a fact. |
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Marpol
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| Posted: Sat Mar 07, 2009 4:52 pm Post subject: |
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| Quote: | | This is not an opinion this is a fact. |
Yes indeed.
And much conflict is caused by facts because when the facts are in conflict with the spoon fed masses opinions this causes them to doubt what it was they thought they knew only to find out it's all been a big game and they have been played for a sucker.
For example, the news media keeps reporting how the United States Government is spending "taxpayer" money to bailout AIG, Citigroup and the auto industry GM and Chrysler.
That's what the news media spoon feeds the masses.
The facts are the United States Government simply "prints" checks totaling $180,000,000,000.00 dollars ($180 billion dollars) and gives those checks to AIG then the USA Government calls THAT phony money created by "Administrative Decree" a "LOAN." A United States Government check can't bounce. If you don't understand that then you just don't know how government fiat money works.
AIG then deposits that phony check into their general operating account to pay CLAIMS, employee salaries and all other business expenses involved with running a bankrupt PROPERTY & CASUALTY insurance business. GM has done the same thing along with Citigroup the "architect" of the now absolutely failed "Universal Banking Business Model"
I know these facts are in conflict with what clueless Katie reads off the teleprompter on the CBS evening news but facts are facts.
For more information read THIS THREAD titled Banking and Legalized Fraud.
By the way, the only reason a $100 dollar bill is more valuable than a $5 dollar bill is because of the way the ink is printed on the paper.
It's the same sized piece of paper, it takes the same amount of time to engrave the printing plates, the same number of man hours to run the presses, about the same amount of ink is used.....so the only real difference is how the ink is arranged on the paper.
So please read, then re-read the thread titled Banking and Legalized Fraud
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GarySpicuzza
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| Posted: Sun Mar 08, 2009 3:37 pm Post subject: |
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some days before i was watching the videos on mortgagefit forum, there they were explaining that how this whole system of banking goes.Its animated video really nice stuff to educate any guy on the banking process.
Ultimately lenders makes money out of the reserves from masses.
Gary!!! really this thread of banking and legalized fraud is marvelous .Will surely recommend to anyone who want to get insight about the banking system and the gubment hand in this process.
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amit
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| Posted: Sun Mar 08, 2009 7:22 pm Post subject: coz |
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death benefits are nontaxable not because one has lost their income but that premiums were already taxed.
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