Good news! The cash value in your permanent life insurance policy usually grows tax-free. This means you don’t pay taxes on the interest or gains while the money is accumulating within the policy.
However, accessing this cash while you’re alive can have tax implications:
- Direct Withdrawal: Taking money out of your policy can sometimes trigger taxes, depending on how much you take out and the total value of the policy.
- Policy Loan: Borrowing against your policy is often tax-free, but it’s important to understand how this can affect your death benefit if the loan isn’t repaid.
- Collateral Loan: Using your policy as collateral for a loan usually doesn’t have direct tax consequences.
Still confused? Don’t worry – we’re here to help! Book an easy meeting with us to discuss the specific details of your policy and make sure you understand the tax implications.