Whole life insurance policies have taken the spotlight as investors seek secure investment alternatives to today’s rocky equity markets. Not only do these policies provide for tax-deferred growth, but they come with many of the guarantees sought by clients today.
The market for these policies is soaring, as clients see them as vehicles allowing for a return on their investment in the life insurance contract without the risks inherent to investing in the open markets. An advisor’s guidance can be critical in determining whether a whole life policy is a smart investment for any given client and can also provide invaluable in navigating the often-complex rules governing the tax treatment of these policies.
The advice of a financial advisor is critical in determining if and when withdrawing against the cash value of the policy is a smart choice. In general, the policyholder can borrow against the accumulated cash value without paying taxes or interest on the amount withdrawn. Of course, there are exceptions and consequences that must be considered when making these withdrawals.
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Whole Life Policies: Tapping Cash Value as Alternative to Equity Investing, by William H. Byrnes, Esq., Robert Bloink, Esq., LL.M.
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