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Did House Bill 159 get passed which increased the limits of the Florida Life and Health Insurance Guarantee Association FLHIGA from 100k to 250k in cash values of annuity contracts?
After the FDIC raised the limits on deposits held at banks and savings and loans, it left other investment instruments, such as annuities, at somewhat of a disadvantage in Florida, since FLAHIGA limits on cash values were still capped at $100,000. Many other states had already raised their cash value limits to $250,000 or even $300,000 for annuities. H.B. 159 sought to bring FLAHIGA more in line with similar guaranty mechanisms in other states and with the FDIC limits for investments held in banks. This legislation raises the FLAHIGA limits on cash values of annuities from $100,000 to $250,000 and levels the playing field for investors who want alternatives to putting their money in the bank. The bill went into effect on July 1, 2010. Starting on this date, investors will have the same protection when putting their cash into a deferred annuity contract as they would when putting money in an FDIC-insured bank.
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Cash Value of Life Insurance Taxable? There are two ways to access cash in a life policy. Withdrawals and loans. You are not required to pay back loans from a policy, sincy yo…u are loaning yourself your own money. If you withdraw the money any amount over what you have paid in premiums is taxable. If you loan out the money it is not taxable as long as the policy is still in force. You have to be carefull not to take out too much in a loan or it will implode the policy. Talk to your agent or the company to find out the max loan amount available while still keeping the policy in force. Most people withdraw up to what they have paid in, and then loan out the rest. If the cash value grows too large compared to the death benefit it becomes a MEC or modified endowment contract, and is then subject to a 10% tax. A good agent who is knowledgable in designing a policy will be able to keep this from happening. Finally, be aware that a policy loan is not free. That is, the policy will prescribe the interest rate at which the loan is made. While it is generally less than the market rate of interest would be for a commercial or personal loan, you will end up paying back more than you borrow, or the dividend that you might otherwise receive (in the case of a mutual company) may be less to account for the interest on the loan. Check the terms of the policy for details. If the loan is not repaid prior to the time of death, the loan balance, including accrued interest, will be deducted from the death benefit. More information:It depends on the type of "cash out" you applied for and which state you live in. You should be able to obtain some form of written verification regardless, so contact your life company.(1) While life insurance policy is enforce, the cash value of the policy and its growth are not considered taxable. (2) If you surrender or cash-in the policy, and the total amount of cash value returned to you is less than the total amount your policy invested into cash value, it is considered a return of principle and is not taxable. (3) If the cash value returned to you is greater than the amount your policy invested into cash value, the amount in excess of the amount invested into cash value is considered a "gain" and is taxable as income. (4) If the policy you surrender (cash-in) is considered a MEC or Modified Endowment Contract (the company can inform you if it is), cashing-in or borrowing against the cash value may be fully taxable. (Consult a tax adviser if this is the case).Be cautious of plans to take loans from your life insurance to avoid taxation. These loans are still taxable beyond what you paid in if your policy ever disappears while you are alive. For this reason, it is critical to carefully review your plan each year, particularly if you plan to take loans or have loans against your policy.
Answer NO the Tax Court held that the cash values were not constructively received by the taxpayer where he could not reach them without surrendering t…he policy. The necessity of surrendering the policy constituted a substantial �limitation or restriction� on their receipt. Cohen v. Comm., 39 TC 1055 (1963), acq. 1964-1 CB 4. From Tax Facts on Life Insurance http://cms.nationalunderwriter.com/cms/taxfacts/product+content/Site+Map/Life+Insurance/Income+Taxation/Cash+Value+Increases/0245-00-TF1.htm For more info see www.SteveShorr.com/life.htm
Answer . They are not all the same, will depend on the face amount contact the issueing company or read the policy for this information.
Term life insurance does not accumulate cash value as such; whole life insurance, in one of its various forms, does. A type of term insurance that does have the potential of r…eturning money to the policyholder is return of premium (ROP) term insurance policy. With a ROP term policy, all premiums paid are returned to the policy owner at the end of the term selected (e.g. 15, 20, or 30 years). Cash value does not build in the customary sense, but depending upon the precise variety of the policy, something more than the actual premiums paid may be repaid.
No, in that specific circumstance it is tax exempt. As a point of interest, this is known as a "1035 exchange."
Cash value of whole life insurance is referred to as the "Cash Surrender Value". The cash surrender value is money the policyholder is supposed to receive from the …insurance company when surrendering the whole life insurance policy with cash value. The cash surrender value amount due is the sum of the cash value stated in the whole life insurance policy minus any surrender charge and any outstanding loans and interest due on the loans.
One of the things that you can do is to contact the customer service department of the insurer. Doing so can give you the current cash value, which is based upon the actual re…turn on the company's investments, and which is a large part upon which the growth of cash value is based. You should also review the policy itself, ssuming that it is a whole life policy (which is the only type on which cash value accumulates). One or more pages of the policy, typically toward the front of the policy, will be entitled "Table of Cash Value" or words of similar import. It will incicate the projected (not guaranteed) accumulation of cash value, and the current total, according to how long the policy has been in force. Keep in mind that if you ceased making premium payments for a period of time, the policy may have been "kept alive" by having premiums deducted from cash value. If that happened, the actual cash value at a given point in time may be less than that shown on the table.
Coming in January of 2009, six companies have been chosen by the State of Florida to provide "Guaranteed Issue" policies. Do a search on "Cover Florida" and you'll find …some articles on the subject. Unfortunately, there aren't many details on the plans. I write applications for BlueCross Blueshield of Florida, one of the six companies chosen, and we don't even have any details as of 12/11/2008.
The cash value that develops in a whole life insurance policy is not "insured" in the sense that it is not guaranteed to accumulate at a rate greater than the minimum rate set… forth in the contract. However, insurance policies that are issued by authorized (licensed) insurers may be considered to be "insured" in another sense. If the insurer encounters financial problems that require placement of the insurer into a rehabilitation or liquidation process by a state regulator, the involvement of the state insurance guaranty association may be triggered to ensure that claims are paid. The guaranty associations are creatures of state law, such that the issue of cash value would be determined according to the governing statutory law.
It helped cover medical costs for the indigent
The cash value of something is the value before taxes. Net or Netto cash value is after taxes.
Initially, it is important to understand that cash value is a feature of whole life insurance only, not term life. The simple answer to the question is that cash value comes …from premiums paid. The structure of a whole life policy is such that a portion of the premium is allocated to the actuarially determined cost of "protection", and the rest is allocated to an account that develops cash value. You can analogize cash value to a savings element within the policy, but it does differ in important ways from true savings and should not substitute for it. Whether whole life or term, life insurance should be purchased principally for the financial protection that it provides to survivors.
Certain insurance policies are designed to be a kind of combination of life insurance and savings account. For every insurance premium you pay, some of the money pays for life… insurance and some of it is kept as an investment. The more premiums you pay, the more money will be accumulated. The owner of the policy can obtain this money at any time, just as if it were an actual savings account at a bank. The only advantage of saving your money by means of this kind of insurance policy, as compared to saving your money by putting it in the bank, is that you have to keep paying the insurance premiums if you want to continue to be insured, therefore it becomes a kind of mandatory savings. It is a form of fiscal discipline that you can choose to impose on yourself. Of course, if your fiscal discipline is poor, you can still withdraw the money.
All insurance contracts are aleatory by their very nature. This is because, while the insured is required to pay premiums to keep the contract in force, the insurer may not be… required to perform if a loss within the scope of coverage does not occur.
Annuity income depends on life expectancy and is thus classified as life insurance.
The cash value can be borrowed from the insurance policy and an annuity purchased with it. Depending upon the insurer, you may be able to have the two transactions done with t…he same company (assuming you wish to buy an annuity product from that company). Keep in mind, however, that the cash value withdrawal is a loan that accrues interest according to the terms of the policy. Therefore, in order to make the transaction worthwhile, the annuity must throw off sufficient income to make up for the reduction of value of the insurance policy due to accruing interest on the policy loan.