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One of the greatest benefits of life insurance is its ability to provide a tax-free wealth transfer to your loved ones, helping you protect their financial future no matter what happens.
When you purchase a life insurance policy, you’re creating a financial safety net for your beneficiaries. If you pass away, your life insurance policy pays out a death benefit — a lump sum of money — that is generally free from income tax. This means the full amount goes directly to your beneficiaries, providing them with immediate financial support when they need it most.
You select the type of life insurance (term, whole life, universal life, etc.) and the coverage amount.
You pay premiums regularly based on the policy terms.
Upon your passing, the insurer pays the death benefit to the beneficiaries you named in the policy.
The payout is typically income tax-free and bypasses probate, so your family gets the money faster and without unnecessary legal costs.
Life insurance proceeds can cover mortgage payments, outstanding debts, medical bills, daily living expenses, education costs, and more — giving your family financial stability during a difficult time
Because life insurance death benefits are usually not subject to income taxes, your beneficiaries receive the full intended amount — helping your legacy go further.
Life insurance proceeds typically pass directly to beneficiaries, avoiding the lengthy probate process and reducing legal expenses.
The death benefit can be used however your beneficiaries see fit — whether that’s paying off debts, investing for the future, or covering everyday expenses.
Suppose you have a whole life insurance policy with a $750,000 death benefit. If you pass away, your beneficiaries receive the full $750,000 payout without paying income tax on it. They can use that money to pay off your mortgage, cover medical bills, or save for their children’s education — all without worrying about taxes reducing the amount.
Types of Life Insurance That Facilitate Tax-Free Wealth Transfer
Term Life Insurance: Provides coverage for a specific period and pays a tax-free death benefit if the insured passes during that term.
Whole Life Insurance: Offers lifelong protection, with a guaranteed death benefit and cash value accumulation, facilitating long-term tax-free wealth transfer.
Universal Life Insurance: A flexible policy combining life coverage and cash value growth, with tax advantages for beneficiaries.
You can work with an agent to find a life insurance policy and can get a personalized, free, and no-obligation life insurance quote in just a few minutes. It’s that easy to start protecting your family’s financial future! Requesting a life insurance quote through AIG Direct is now faster and easier than ever!
With My Term Life Guy, you can get quality term life insurance coverage for less. Call now and save up to 60% on your term life policy compared to the same coverage through other carriers. That means you can get similar coverage for your money – and that’s always a good thing!
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