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The death benefit paid to your beneficiaries is tax-free. But there are situations that could lead to a tax bill, such as withdrawing cash value from the policy or surrendering it. See our guide to life insurance and taxes.
If you have cash value in a whole life insurance policy you can take a loan against the money or withdraw it. This money can be used for anything from supplementing retirement savings to paying for a child’s college tuition. When you buy a whole life insurance policy, your policy illustration will show you how fast your cash value may grow over the years, but be sure to ask the agent or insurer to demonstrate the reasonableness of the dividend interest crediting rate used in the calculation of that growth.
Single premium life insurance is a policy that is paid with only one premium payment. You will make one lump sum payment instead of the standard monthly, quarterly or annual premium payments.
Whole life insurance is a type of permanent life insurance with the potential for lifelong coverage (usually through age 95 to 120) assuming you pay the premiums due.
As with all types of life insurance, the younger you are when you purchase whole life insurance, the lower your premium will be. But in addition to lower premiums, buying a policy when you are younger also means there should be more time for your cash value to accumulate. So, while there is no specific best age to buy whole life insurance, the sooner you can buy it, the better.
Information provided on Forbes Advisor is for educational purposes only. Your financial situation is unique and the products and services we review may not be right for your circumstances. We do not offer financial advice, advisory or brokerage services, nor do we recommend or advise individuals or to buy or sell particular stocks or securities. Performance information may have changed since the time of publication. Past performance is not indicative of future results.
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Managing Editor, InsuranceAmy Danise is the managing editor for the insurance section at Forbes Advisor, which encompasses auto, home, renters, life, pet, travel, health and small business insurance. She is a highly experienced editor, writer and team leader with an extensive background in the insurance sector. With a career spanning more than three decades, she has focused her work on consumer-oriented publications.
Life Insurance ExpertBarry D. Flagg CFP®, CLU, ChFC, GFS®, AEP® is the inventor and founder of Veralytic , the leading online publisher of life insurance pricing and performance research and product competitiveness ratings. Veralytic is the result of his unique background in both the fiduciary investment business where he became the now oldest, youngest certified financial planner (CFP) in history, and as a life insurance expert consistently recognized in the top 1% of the industry. He’s renowned for applying Prudent Investor Principles to life insurance product selection or retention and portfolio management.
As a result, he serves as sub-advisor to thousands of irrevocable life insurance trusts (ILITs) as well as RIAs and wealth managers, is a regular contributor to Forbes Advisor for articles about life insurance, leads curriculum development and instruction for Applied Fiduciary Practices involving life insurance for The Center of Board Certified Fiduciaries at Wake Forest University, and serves as volunteer to the CFP Board professional standards and legal department for complaints involving life insurance. Barry has authored numerous articles for national publications on the management of life insurance as an asset according to established and proven asset management principles and frequently teaches continuing education courses to attorneys, CFP®s, CPAs and CTFAs.
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