Your savings can be taxed if you set your life insurance up incorrectly.
Simply put, when you deposit "too much" into a life insurance policy, you create a "Modified Endowment Contract" (MEC.)
So, what are the disadvantages of a MEC?
- Any gains you make in your policy will be taxed at your individual tax rate upon withdrawal
- There's a 10% early withdrawal penalty if you try to take out before 59.5
- Because of the 10% penalty, your money is less accessible
Worst part?
Once your policy has been established as a MEC, it's impossible to overturn.
So, how do we avoid converting our policy into a MEC?
In today's episode, you'll discover how to make sure your policy remains tax free forever.
Listen now!
Show Highlights Include:
- How converting your policy into a "MEC" forces you to pay income tax on the growth of your savings (1:03)
- How the same death benefit can cost you either $50 a month or $200 a month and what the difference is (4:59)
- How to avoid paying any agents or brokers fees when investing in a whole life insurance policy with "paid up additions" (6:06)
- Why shrinking your policy's death benefit legally allows you to receive a higher payout when you retire (11:15)
Reach out to me:
valerie@alphaomegawealth.com
https://www.linkedin.com/in/valerie-laroque-lacp-b569509Infinite Banking Mastery (infinitebankingnorthwest.com)
