Avert Estate Taxes With Single Premium Life Insurance

By: Dean Hood
Single premium whole life is simply the most popular within the annuity market. Until a few alterations were made by the IRS Tax Code it made available the same type of tax deferral as was available in annuities. This type insurance enables you to shield and pass on your personal assets without passing along estate taxes.
The favorable features of Single Premium is going to be you are able to grow tax deferred earnings and also maintaining access to your money. This has its best appeal in the annuity market, where it has the same type of tax deferral as annuities yet having the ability to make tax-free loans. The benefits compared to annuities was the death receipts from single-premium whole life insurance transferred free from federal income taxes on the gain in value.
Then the IRS through the enactment of Section 7702A within the Internal Revenue Code created the concept of a MEC (modified endowment contract). Soon after the change in the regulation to designate single-premium whole life insurance to be a MEC, marketing of Single Premium Whole Life slowed to a trickle. It was commonly held that single-premium whole life insurance policies had lost its tax standing, therefore insurance agents went back to marketing annuities and consequently it had been shelved.
A single-premium whole life policy merely lost some of its tax advantage but still retains its tax status. It is a superior product compared to annuities and continues to make a lot of sense and fundamentally it allows you to preserve and shift your wealth without passing along estate taxes.

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