Tax benefits of insurance
There are a number of tax benefits to life insurance, including the following:
- Any earnings accumulated in your insurance policy’s cash value grow free from taxes. Please note that in a variable life insurance policy, cash value growth is not guaranteed.
- The death benefit of your permanent life insurance is generally passed on to your beneficiaries free from federal income tax.
- Premium withdrawals may be tax free, depending on the type of coverage you have.
- Transfers among the underlying investment options of a variable life insurance policy are generally not subject to current income or capital gains taxes.
- Should your need for the policy's death benefit decrease, you can take loans or withdrawals from a life insurance policy prior to age 59½ without the 10% early withdrawal penalty.
Withdrawals from life insurance policies may be subject to fees, penalties, and income taxes depending on the specific life insurance policy and the policyholder’s tax situation. Withdrawals reduce the policy value and death benefit.
Life insurance contains exclusions, limitations, and terms for keeping it in force. For costs and complete details contact a financial professional.
This information is provided for informational purposes only. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.
Please be advised that this document is not intended as legal or tax advice. Accordingly, any tax information provided in this document is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. The tax information was written to support the promotion or marketing of the transaction(s) or matter(s) addressed and you should seek advice based on your particular circumstances from an independent tax advisor.
Please consider the charges, risks, expenses, and investment objectives carefully before purchasing a variable life insurance. For a prospectus containing this and other information, please contact a financial professional. Read it carefully before you invest or send money.
Equitable Financial Life Insurance Company (New York, NY) issues life insurance and annuity products. Securities offered through Equitable Advisors, LLC, member FINRA, SIPC. Equitable Financial Life Insurance Company and Equitable Advisors are affiliated and do not provide tax or legal advice.