Do you pay taxes on Life Insurance?

In general, you do not have to pay taxes. You don’t have to report it to the IRS. So in general, you don’t have to. Now there are some kinds of. Policies that generate gains and it’s a kind of politic, right? He gains in. The gains are collected, then yes, you do have to pay taxes on it. There are two great examples I’m going to give you right now.

One is going to sound like, I’m not answering the question, but I promise I am. So one type is going to be an annuity, which is through their all through life insurance companies, and if it’s collected as like a, a death benefit, something like that. So it’s a tune. To life insurance. there are some strong annuity programs out there.

I often help my clients with annuities as well. And so let’s say it, annuity is averaging five or even 7%, gains per year when it’s collected when it’s put into your bank account or it’s used for something other than a rollover or transfer or something like that, 10 35 exchange when it’s actually either spent or deposit.

Positive. then in that situation, you pay on the gains. A better example towards the life insurance side is going to be, universal whole life is a pretty good example. A lot of those can be structured in ways that, they’re built to, generate games. And so sometimes those can be million, 5 million, 10 million plus, policies that they grow into overtime.

They get bigger and bigger every day in terms of the size of those. And so those are more expensive policies, but with a big payout and it’s money that’s invested and generates interest and grows over time. So that’s how that works. So I hope this has been helpful. If you have other life insurance questions, annuity questions, even anything I can do for you, I please click the button below and I’ll be happy to do a free consultation for you.

 

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Chad McMahan

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