Author: Mark Weber – SilverStone Asset Management
On a nationally syndicated radio program, a caller asked a financial expert the following question: “My wife and I recently retired. We are trying to decide if there’s any reason for us to keep our term life insurance after retirement. What is your recommendation?" The answer was, “No. Drop the policies. There is never a need for life insurance once you retire."
Life insurance can enjoy favorable treatment under federal tax law. When structured properly, beneficiaries can receive death proceeds 100% tax-free, even passing free of probate and federal estate taxes. Furthermore, cash values can grow tax-free within the policy, and tax-free loans can be taken against the cash values. But favorable life insurance taxation isn’t guaranteed. When policies are structured improperly there can be significant consequences.
We get it – life insurance can be confusing. With so many different coverage options, it’s often difficult to know what is right for you or fully understand the policy you’ve already purchased. In very broad terms, there are two types of life insurance contracts: 1) term insurance; and 2) permanent insurance policies, such as universal life insurance.
Janet Yellen, Chair of the Board of Governors of the Federal Reserve System, announced in December 2015, that the board decided to raise rates by .25%. This made headlines across the country because rates have been 0% since December 2008. The committee expects to make gradual increases as the economy continues to improve.