In Canada life insurance death benefits are usually tax free. One exception would be a policy registered as an RRSP (not currently done, but was in the past),
Cash value growth is not taxed while it is inside a policy, unless it exceeds the MTAR (Maximum Tax Actuarial Reserve). Insurance companies monitor their policies to be sure this does not happen. Surrendering the policy would trigger taxation. There are other events such as borrowing, or most transfers of ownership, that could also trigger a gain. The proceeds, less the cost of insurance is taxed the same as interest income.
If you have further questions, or feel that I could be of assistance, please do not hesitate to contact me.
If you would like to work with a local life insurance broker, you could start with a Google search. For example, if you search for: life insurance broker Halifax or life insurance agent Halifax, my name, along with several others, will come up. You can use the same method to find a life insurance broker in your community.
Life insurance proceeds paid to a beneficiary are not charged income tax in the United States. If the beneficiary chooses to take the death benefit on a payment plan, the insurance company will pay interest to the beneficiary on the amount that has not yet been paid out. Taxes must be paid just on the interest.
Inheritance or estate taxes are charged when the proceeds from the life insurance policy bring the estate over a certain dollar amount. In 2014, this exempted amount is over $5,000,000 on the federal level. So most estates do not pay estate tax, but when they do, here is a calculator that can help you assess the taxes: http://sm.marketwatch.com/calculator/estate-planning/estate-tax-calculator-1304463115650/
President, Lane Independent Agency, Southern California
Life insurance benefits are NOT taxes. That is one of the few remaining values in our tax law. The check paid by the life insurance company will go to the beneficiary tax free, so they can keep every dime of it, just like you want. Buy life insurance, protect your family, and know the government will NOT take it away. None of it. Thank you. GARY LANE.
.JPG){kind=avatar}
Cash value growth is not taxed while it is inside a policy, unless it exceeds the MTAR (Maximum Tax Actuarial Reserve). Insurance companies monitor their policies to be sure this does not happen. Surrendering the policy would trigger taxation. There are other events such as borrowing, or most transfers of ownership, that could also trigger a gain. The proceeds, less the cost of insurance is taxed the same as interest income.
If you have further questions, or feel that I could be of assistance, please do not hesitate to contact me.
If you would like to work with a local life insurance broker, you could start with a Google search. For example, if you search for: life insurance broker Halifax or life insurance agent Halifax, my name, along with several others, will come up. You can use the same method to find a life insurance broker in your community.
Inheritance or estate taxes are charged when the proceeds from the life insurance policy bring the estate over a certain dollar amount. In 2014, this exempted amount is over $5,000,000 on the federal level. So most estates do not pay estate tax, but when they do, here is a calculator that can help you assess the taxes: http://sm.marketwatch.com/calculator/estate-planning/estate-tax-calculator-1304463115650/