When you acquire your life insurance policy through Goodman Insurance, Inc., a question you will naturally have is: How are taxes arranged on this sort of thing? You’d rather not have your family paying half their payout to the IRS, right? So how does it work? Let’s go through it step by step.
- In Shelton, CT, you don’t have to worry about the actual payout being taxed. The amount of money for which you are insured goes right into your beneficiaries’ pockets, from the insurer to the loved ones. There may be legal fees and so on in some scenarios, but the taxman has nothing to do with this exchange.
- Interests and profits are taxed. If your insurance policy relies on payouts from an investment, then this money will be taxed like any other investment, be it stocks, small business, venture capitalism, and so on.
- The purchase of an insurance policy does not involve any taxation. Rather, you do not have to pay any taxes in this regard. Any taxes related to the business of insuring will be paid by the insurer.
- After the payout, the money is just regular money. While the initial payout was not taxed, if your nephew wants to take his share and start a business with it, he’s going to have to pay all the same taxes he would have had he started the business with a loan or with his income.
With a cash payout, you can effectively get through the whole process without involving the IRS on any level whatsoever. Life insurance is one of the only exchanges we have left where the IRS will not come in and ask for their cut.
Reach out to our agents at Goodman Insurance, Inc. in Shelton, CT asks questions about life insurance and learn how to start a policy.