Matt Kryder: Hi, it’s Matt Kryder of Petschauer Insurance answering most common questions on life insurance. One of the questions we get a lot is, “How does life insurance save me on taxes?” It does this in multiple ways. One of the ways is if you were to die, your beneficiaries receive the death benefit proceeds income tax free. However, if you have a sizable estate, you may be susceptible to estate taxes. One way we can bypass this is having the life insurance policy owned by an irrevocable life insurance trust in which case it will pass onto the beneficiaries estate tax-free as well.
Another way that it’s an advantage is if you have a cash value life insurance policy such as whole life or universal life you can access cash while you’re still alive tax-free as long as you maintain the life insurance, as long as you do not cancel the life insurance. I hope this was helpful. Keep the questions coming. Take care.