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Life Insurance Problems
Life insurance is a contract between a person and an insurance company. The individual is considered to be the insured and the company is the insurer. A life insurance policy ensures that a set amount of money will be paid to the insured person’s beneficiary on his/her death. Understanding the different features and types of life insurance policies may not be a very simple task. Given below are some of the questions that have been answered by Experts.
Which of the life insurance policies may be considered the cheapest insurance policy?
term life insurance
policy may be considered to be the cheapest form of insurance policy as it is purely life insurance. Unlike the other insurance policies available, it does not contain any savings component.
Is the death benefit of a life insurance policy considered to be tax free income?
In most situations, the death benefit of a life insurance policy may be considered to be tax-free income. However, there are some exceptions to this rule. Some of the exceptions are:
The money is transferred to the person insured
The money is transferred to the business partner of the insured person
The money is transferred to a corporation where the individual is an officer or shareholder
The basis of the transfer for the new owner is the same as the original owner of the policy.
What are the factors that determine how much money an individual may get if a life insurance policy cashed out?
There may be various factors that will help a person determine how much money he/she may get when a life insurance policy cashed out. Some of these factors are the premiums that have been paid, the time for which the policy has been in existence and the amount that the premium has earned from the time it has been in effect. If the individual wants to know the exact amount, he/she may have to contact the person or company who issued the policy.
Can an annuity be owned by a life insurance policy? Can both these be offshore?
It may be possible for a life insurance policy to own an annuity. Both the insurance and the annuity may be offshore.
Would an individual have to pay taxes on an insurance policy if it matures before his/her death?
If an insurance policy matures before an individual’s death, then he/she will be given the death benefit. However, this money will be considered as taxable income. If the individual does not want the entire money, he/she may request to convert the money into an annuity.
Is death benefit from a life insurance policy protected from creditors?
Most of the times, whether the death benefit from an insurance policy is protected by creditors or not may be determined based on how the beneficiary spends the money. However, in most situations, this money may be protected from creditors and may not be used to pay them off. It will be directly transferred to the deceased person’s spouse or next of kin.
Should any money that a person may receive from life insurance be reported on his/her taxes?
Since benefits got from a life insurance policy are not considered to be taxable income, it need not be reported on the individual’s taxes.
You may always be worried about what will happen to your loved once if you died. Not knowing how your near and dear one’s will cope with your sudden death and how secure their life will be can lead to a lot of helplessness and frustration. A life insurance policy can help you make sure that they are provided for financially. There are various kinds of insurance policies that are available nowadays. It is important for you to know the features and benefits of all these policies before you buy them. You may ask an Expert if you have any questions about these policies.
Recent Life Insurance Questions
I am a Limited Partner with a family owned Limited Partnership
I am a Limited Partner with a family owned Limited Partnership that owns a mobile home park. The Partnership owns all the property and the equipment of the Park. The sole General Partner leases the property and the equipment to a Corporation , that he is the sole owner of. The corporation operates the Park. The General Partner uses the checking account of the Partnership to pay all his own personal expenses and records them as cash distributions, to himself. He then pays the taxes he owes on his cash distributions to the US Treasury and considers this another cash distribution (to himself). I have been doing some research and am very concerned the Partnership is nothing more than a sham for tax breaks. The Partnership Agreement states the Partnerships purpose is to make a profit (by selling real estate or leasing property). The Corporation pays the Partnership approx. $17,500.00 a month to lease the property and equipment of the Park. The Corporation is paid approx. $57,000.00 a month in rent from the Tenants. The General Partner is paying several Life Insurance policies with the checking account for the Partnership as well as seasonal rental fees for his personally owned camper, parts for his Harley Davidson, gifts to his live-in girlfriend, his cats medical bills to the Vet's, etc... He also writes a check out to himself every month, for $10,000.00. He has been spending the money faster than the Partnership makes it. I requested a copy of the lease agreement the Partnership has with the Corporation, but his Lawyer told me the General Partner felt this was not reasonable for me to have this. I feel this "Partnership" is a tax avoidance scam for him to use all the money as his own. I am uncertain how he, in his capacity as the General Partner, can lease property he has control over to himself, as the sole owner of the Corporation??? Could this be a tax avoidance scam? I could understand if he was unable to manage the Park, but he is capable of this
Mother is 94yrs old. She has no Social Security Income, no
Mother is 94yrs old. She has no Social Security Income, no other means income, no savings, no bank account, no property and disable . The only thing she has is a paid up whole life ins policy (for Burial Only ). Medicaid informed me that that amount 8400.00 will have to be counted as income. Is there any way we can shelter her Burial Expenses ?
John M. Vaughan
I have a Prudential Variable Appreciable Life Insurance Policy.
I have a Prudential Variable Appreciable Life Insurance Policy. I don't really understand exactly what I have.
Policay Face amount $100,000
Death Benefit $102,230
Cash Value $41,649
If I die today, what amount does my beneficiary receive? $102,230 or that plus the Cash Value?
Would it be wise to terminate the policy and receive the cash value of $41,649? If I did that, is it taxable income to me at that time? Appreciate your knowledge and advice.
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