Do you have to pay taxes on money borrowed against paid up life insurance?
Borrowed money is not taxable.
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If I'm not mistaken, life insurance is paid out on death.. It may have a clause that pays the premiums on it in event of disability, but that, like a policy that pays you on …disability, is basically under a disability insurance benefit, not life insurance policy.
Life insurance death benefits are paid out tax-free as long as your premiums were paid with after-tax money. If you have a cash value life insurance policy and surrender the p…olicy, you may be subject to a taxable gain if the total cash value exceeds the cost basis of the policy.
I borrowed against a life insurance policy and been paying some back each month do i have to pay all of it back before i borrow against it again?
Answer . no
No.. To the best of my knowledge, veteran's life insurance has no cash value.
If you are an individual who receives the life insurance proceeds, you may not have to pay any federal income taxes on the benefits.. If the life insurance policy names a tru…st as beneficiary, the trust may be subject to estate taxes.
NEWS ALERT: YOUR IN BANKRUPTCY...YOU HAVE TROUBLE HANDLING FINANCES, You have more debt than you can handle...COMMON SENSE: BORROWING MORE TO GET OUT OF DEBT DOESN'T WORK! . … Don't do it, don't do it, don't do it! Your 401k is exempt from seizure under virtually all circumstances...including bankruptcy. (Example...OJ Simpson, owed a lot to the Browns after they won the wrongful death suit....they could take his Heisman trophy, his cars, his future income from autograph signings, etc, etc....and did and continue to. As a judgement, he can't even escape it through BK. But, they can not touch his multi million dollar 401k/IRA.) If you take a loan against the 401k, the money is no longer protected...it can and will be taken by creditors...given the opportunity....and since your already in serious financial problems now... it's highly possible that can come about. Then your left with a new debt to pay off, that uses up your 401k....and nothing else. Well, something else - you'll have a big new tax bill and debt , because not paying back the loan of the 401k is the same as withdrawing it...so you pay a penalty and everything becomes income! (Rule of thumb, depends on State, but when it becomes a withdrawal, which happens many, many ways, you should consider tax and penalty to be @40% of what you took out). Don't do it, Don't do it, Don't do it! . Read the News Alert Again: Making a new debt can only make your problems worse.. Now...as maybe a more direct answer: There probably isn't a law against your borrowing from the plan. However, depending on your BK, especially in a C13 though, you agreed to only make financial changes with the approval of the trustee. Failing to do so is almost always responded to first by the BK protection being ceased, and sometimes by fraud charges because not keeping your promises to the court falls under that. Finally, the trustee has a right to the funds when taken out and would want them to pay the creditors in the order required by law/the plan. That may or may not include the IRS. Your paying the IRS would be considered a preferential payment by the other creditors, and they would likely succeed in having the money returned to them.
Virtually no insurance company offers a loan against a paid up policy - they thoughts are if you cant keep premiums up then you wont be able to keep loan payments up.
Life insurance proceeds are received income tax free; how the money is taxed afterwards depends upon how and where it is invested.
Some "permanent" insurance polices call for this. But term polices cannot. There are some policies that would allow you to benefit while you are alive if you have a terminal i…llness as well.
yes, as long as the policy is still in force you can borrow agains it
if its a cash value policy contact the companies customer service line.
Probably not. You need to contact the company and ask your question there.
A taxable consequence may occur if the cash surrender value exceeds the cost basis (i.e. the premiums paid into the policy).
Can you borrow funds against money owed to you that is secured by a life insurance policy on the life of the person who owes you the money?
Absolutely not, you can only make a legitimate loan through a bank
No. Group life does not belong to you.
Yes, if your life insurance policy has accumulated cash value. Notall life insurance policies will accumulate cash value: forexample, term life insurance policies will not acc…umulate any cashvalue. Whole Life and Universal life policies can accumulate cashvalue and the policy owner can take loans in the limit of the cashvalue (some companies limit loans to 70 - 80% of the cash value).
The only case where the insured can collect on their life insurance is with a whole life policy. In that instance any interest or dividends are taxable.