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Category:Life Insurance109
Taxes & Estate Planning in Life Insurance
10 articles found
Life InsuranceWashington State Long-Term Care Tax (WA Cares) Explained
Washington State charges a 0.58 percent payroll tax through the WA Cares Fund to pay for a $36,500 lifetime long-term care benefit for eligible workers. Workers who owned private long-term care coverage before November 1, 2021 could apply for a permanent opt-out, and specific groups such as veterans with disabilities and out-of-state workers can also be exempt. Understanding the rules helps Washington residents plan their care.
Brian Greenberg•Updated Jul 2026
Life InsuranceAre Life Insurance Premiums a Deductible Business Expense?
Life insurance premiums are generally not a deductible business expense when the business is a direct or indirect beneficiary, which covers key person coverage and policies backing buy-sell agreements. The main exception is employer-paid group term life for employees: premiums are deductible, and the first $50,000 of coverage per employee is also excluded from the employee's income.
Brian Greenberg•Updated Jul 2026
Life InsuranceFunding a Buy-Sell Agreement with Life Insurance - Guide
A buy-sell agreement is a contract that fixes what happens to an owner's share of the business at death, and life insurance is the standard way to fund it: the policy delivers the exact cash needed to buy out the deceased owner's stake the moment it is needed. The two classic structures are cross-purchase, where owners insure each other, and entity purchase, where the business owns the policies.
Brian Greenberg•Updated Jul 2026
Life InsuranceImputed Income and Life Insurance - The $50,000 GTL Rule
Imputed income is the taxable value of employer-paid group term life insurance above $50,000 of coverage. The IRS sets the value using its Table I uniform premium rates based on your age, and the amount appears on your W-2 (Box 12, Code C) and is subject to Social Security and Medicare taxes. The first $50,000 of employer-paid coverage stays tax free.
Brian Greenberg•Updated Jul 2026
Life InsuranceCollateral Assignment of Life Insurance - How It Works
A collateral assignment of life insurance gives a lender a priority claim on your policy's death benefit until a loan is repaid. SBA lenders routinely require it when a business depends on the owner. The lender is repaid first from the death benefit if you die with a balance outstanding, your beneficiaries receive the remainder, and the assignment is released once the loan is satisfied.
Brian Greenberg•Updated Jul 2026
Life InsuranceLife Insurance to Secure an SBA Loan - What Lenders Require
SBA lenders routinely require life insurance before closing when a business depends on its owner: a policy at least equal to the loan amount, with a collateral assignment giving the lender first claim until the debt is repaid. Term life fits best, and no-exam accelerated underwriting means even a tight closing timeline is workable for healthy applicants.
Brian Greenberg•Updated Jul 2026
Life InsuranceIrrevocable Life Insurance Trust (ILIT) - How It Works
An irrevocable life insurance trust (ILIT) is a non-amendable legal structure that owns a life insurance policy so the death benefit stays outside the insured's taxable estate. The grantor funds premiums with annual exclusion gifts, beneficiaries receive Crummey withdrawal notices that qualify those gifts for the $19,000 annual exclusion, and at death the trustee collects and distributes the benefit under the trust terms.
Brian Greenberg•Updated Jul 2026
Life InsuranceAre Life Insurance Premiums Tax Deductible?
For personal life insurance policies, premiums are not federal-tax-deductible. The exceptions are narrow but specific: business-owned life insurance used as a documented compensation tool, alimony-required policies issued under pre-2019 divorce decrees, premiums paid by a 501c3 charity that owns the policy, and group life insurance up to $50,000 per employee under IRC Section 79. This guide walks through each exception, the IRS rules that govern it, and how to structure the policy correctly so the deduction is defensible on audit.
Brian Greenberg•Updated Jun 2026
Life InsuranceIs Life Insurance Taxable? Payouts, Cash Value, and More
For the vast majority of beneficiaries, life insurance death benefits are federal-income-tax-free under IRC Section 101(a) when paid as a lump sum to a named beneficiary. However, there are five specific situations where part or all of a life insurance payout becomes taxable: the transfer-for-value rule, federal estate tax inclusion, interest earned on deferred installments, Modified Endowment Contract (MEC) classification, and cash value withdrawals above the cost basis. This guide walks through each scenario with examples, the IRS code section that governs it, and the structures that avoid each tax trigger.
Brian Greenberg•Updated Jun 2026
Life InsuranceViatical Settlement Guide and Calculator
A viatical settlement is a transaction in which a chronically or terminally ill life insurance policyholder sells their life insurance policy to a third-party investor for a lump-sum cash payout. The proceeds are typically income-tax-free under IRS Section 101(g) and can be used for medical care, debt, or any other purpose.
Brian Greenberg•Updated Jun 2026