Do you have an insurance policy that has built up an internal cash value?
Are you taking loans from your policy, or letting the policy ride with premiums being paid from the cash value?
If the answers to these questions are “yes,” be very careful. You see, if you don’t handle things correctly, you can fall into the life insurance policy-loan trap.
Allowing your life insurance policy cash-surrender value to pay your premiums could create nasty, unexpected surprise income taxes.
We’ll tell you how to avoid serious problems when you read my new article titled Tax Tips: Life Insurance Policy Loan—A Tax Nightmare.
Three ways our fact-filled article can help you:
- We’ll tell you about Bruce Brown’s big problem. Mr. Brown bought a life insurance policy, and for the first 6-½ years paid the premiums by check. For the next 15-½ years, he paid the premium by borrowing at 8% interest against the policy’s cash value. Because he borrowed, the year-22 annual interest accrual was twice the insurance premium due! You’ll get the whole story when you read the full article.
- You’ll learn about Bruce Brown’s even bigger problem. The fact is that his insurance company had the right to terminate his policy if the policy debt exceeded the cash surrender value. And that’s exactly what they did, and that’s when his tax nightmares really started, as you’ll learn when you read the full article.
- We’ll explain Bruce Brown’s biggest problem. His problem was (unsurprisingly) the IRS. It assessed $20,093.30 that it said was due. He took the IRS to court and for his pains was assessed a 20% penalty. The moral of the story? Don’t you wind up in trouble with the IRS. You’ll learn how to stay on the IRS’s good side when you read the full article.