Syndicated Financial Columnist, Host of the weekly talk show Steve Savant's Money, the Name of the Game, Scottsdale Arizona
Video Transcript: Hello, everyone. I'm Steve Savant, syndicated financial columnist and host of the weekly online talk show "Steve Savant's Money: The Name of the Game."
I'm answering questions from insurancelibrary.com, and today's question is: Is cash value from a life insurance contract tax-free?
Well, if it's set up as a non-modified endowment contract that complies with a law called TAMRA, and we keep that contract in force for the life of the policy insured, remember not the owner of the policy, not the payer of the premium, but the life of the insured, withdrawals to basis and policy loans of gain can come out tax-free. And as long as that contract, as I've said, is kept in force, that income is never placed on your 1040, so it's never counted as a taxable event.
This is huge, because then you don't have any correlation later on in your retirement for Social Security, for the provisional income test or almost all other income sources have to be tested for Social Security to find out if your benefits are taxed or not.
Well, that's our consumer question for today. If you have any questions, just submit them to www.insurancelibrary.com.
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Video Transcript: Hello, everyone. I'm Steve Savant, syndicated financial columnist and host of the weekly online talk show "Steve Savant's Money: The Name of the Game."
I'm answering questions from insurancelibrary.com, and today's question is: Is cash value from a life insurance contract tax-free?
Well, if it's set up as a non-modified endowment contract that complies with a law called TAMRA, and we keep that contract in force for the life of the policy insured, remember not the owner of the policy, not the payer of the premium, but the life of the insured, withdrawals to basis and policy loans of gain can come out tax-free. And as long as that contract, as I've said, is kept in force, that income is never placed on your 1040, so it's never counted as a taxable event.
This is huge, because then you don't have any correlation later on in your retirement for Social Security, for the provisional income test or almost all other income sources have to be tested for Social Security to find out if your benefits are taxed or not.
Well, that's our consumer question for today. If you have any questions, just submit them to www.insurancelibrary.com.