Long Term Care Insurance Consumer Buying Guide.
Insurance Leads Generation.
Annuities: The Shocking Secrets Revealed.
As we mentioned in previous articles, UL plans are unbundled, the various components of the plan such as insurance charges and earned interest can each be isolated and quantified. Consequently, they are much easier to understand and explain than traditional bundled permanent life insurance products. In this article, we will discuss the tax advantage of the universal life policy.
There are many factors that universal life policyholders must consider when deciding which investment options to choose within a UL plan. Guaranteed interest accounts, for example, are less risky than indexed accounts which have a larger potential rate of return.
1. Advantage
a) Most UL plans allow the policyholder to allocate deposits in a way that matches their risk philosophy. Such a plan may change its investment allocation as the policyholder gets older, negating the need for the policyholder to monitor the UL investment mix to ensure that it is consistent with the policyholder's investment philosophy as that changes.
b) Tax-advantaged status
Investments that invest in the insurance company's general funds, have advantage of preferred tax status, no matter which outside index is linked to mutual fund accounts, if the actual funds is invested in the general fund of the insurance company, they will not be subjected to annual taxation. If the client would like to invest outside of the company's general fund, many insurers have segregated funds attached to their UL contracts and of course, any investment return of these funds is taxable annually.
c) Depending on the type of fund, the income may benefit from tax preferred status if the growth in the fund can be attributed to capital gains or dividends.
d) Used as a carrier fund or shuttle account to automatically receive proceeds from the sheltered accounts should the plan become non-exempt and the funds must be refunded.
e) Non-sheltered investment accounts allow a policy to become paid-up early, often as quickly as with one deposit.
f) If the UL plan can be registered, a non-sheltered account becomes a sheltered account as, once registered, it forms part of the policyholder's 401k or RRSP plans.
g) Investment returns accumulated in the universal life policy is tax free because they form part of life insurance, if payable to beneficiary upon the death of life insured.
2. Disadvantage
a) Funds invest outside of the company's general fund, many insurers have segregated funds attached to their UL contracts and invest outside of the company's general fund. Any investment return of these funds is taxable annually.
b) Limited choice of investments.
c) Investment return of funds withdrawn from universal life insurance policy are taxable.
I hope this information will help. If you need more information, you can read the complete series of the above subject at my home page:
http://lifeanddisabitityinsuranceunderwriter.blogspot.com/
http://life-insurance12.blogspot.com
http://lifeinsurancexiii.blogspot.com
2 comments:
It is so hard to understand each policy, your article surely threw light on this subject..
thank you very much for sharing yout knowledge..
ביטוח חובה לרכב
Fabulous Benefits of life insurance Company at different phases of life and could be for 10 years, 15years and 20 years and in some cases even for 30 years. The best life insurance policy in the world will be the one offer affordable rates and offer the best term for a long term advantage. Everyone wants to invest their money in a secure and trustworthy area for future. So, insurance companies are the best reliable and authentic area where you can invest your money without any tension or discomfort. Insurance policy gives you many options which can be altered according to your choice such as if you want to change your monthly package to life time package or as such.
Post a Comment