People know that is important to one's life. It gives benefits to families as beneficies since it protects and provides financial stability. However, one question often comes up is tax deductible?
As you buy the policy of your choice, you always choose what is best for you as well to your family and one reason people need to purchase insurance because it can be savings and some can also be an investment. Accident can occur anytime day or night without your prior knowledge.
Now regarding as being tax deductible, well there are parts of policies that offer tax benefits and take note that premium you pay for your is not tax deductible not without to some medical insurance premiums. Most death benefits generally is not taxable but it can be change if policy is considered a part of an estate dependent on the value of the estate can caused it to be taxed.
Actually, insurance deductible works by making it part of the insurance cost being deductible on your yearly taxes. It works as it was a health expense where you can include it in the IRS for deductible up to a given limit provided that this particular limit is changed annually. Most regardless of the types are deductible to some extend such as universal life.
In general, premiums are not tax deductible but if ever you borrow money from a financial institution and assign the insurance policy as collateral on your loan then the interest on that loan can be tax deductible. The law allows the individual to deduct whichever is less and there is one thing, if ever your premium goes towards savings then this portion can not be tax deductible. The law is set up to allow the insurance part only of the premium to be deducted.
The individual insurance policy premium is not an income tax deductible since payment is made of group insurance premium which provide employees by their employers. When you purchase within a qualified plan which design concept with very limited positive results due to tax deductible premium advantage which is more than offset by some factors such as:
Proceeds upon death are included in the insured estate
At retirement, policy must be submitted with the plan or take as a plan distribution which policy can not be rolled into an IRA
Insured includes the cost of protection in income if ever the insured person dies while the policy is in the plan; the cash value portion of the policy minus the insured bases is taxable which not the case is if the were outside the plan.
So before purchasing any insurance plan, be sure you understand everything that is in the policy and if you have any question which you think it is not clear to you, ask them to explain it to you. The customer is always right and need a good service as well especially on insurances or which is so confusing sometimes.