Types of Life Insurance-Texas

Posted on April 7, 2015 by

Types of Life Insurance 

Do you know the different types?

All insurance is not the same; nor are all agencies the same.  When choosing coverage to insure your life, it is important to understand the different types and how they would work for your lifestyle.  A trusted insurance agent can outline the various advantages for each insurance type.  This brief overview will present you with the basics. Allsure Insurance can give you specific information.

The purpose of insurance is to provide payment to a beneficiary in the event of your death.

The three major types of insurance are Whole Life (Straight or Permanent), Universal Life and Term Insurance.  The significant differences between the individual types of insurance are enough that they deserve closer inspection.

  •  Whole Life insurance, the insured pays a set premium payment.  The dollar amount of the policy is also a set amount. Payments are predictable and established.  The Whole Life Insurance policy accumulates cash value.  This cash value can be borrowed against; the insured can also  cancel the insurance policy and receive its surrendered value.
  •  Universal Life insurance, the insured gets a whole life policy with a lower net cost over the life of the policy and a non-fixed death benefit.   This insurance coverage also builds cash value and offers the insured a tax deferral advantage.  Universal Life insurance has three main criteria that determines the death benefits:  the insurer’s ability to make premiums, the insurer’s policy charges and the credit rating of the policy.
  • Term insurance, as its name implies, is limited to a specific time.  It is very similar to renting insurance as opposed to buying insurance.  Like the other insurance types, the policy’s beneficiary receives a  death benefit.  The premiums and benefits are fixed on a term insurance policy.

While researching the various types of insurance that might be beneficial for your life, become familiar with a trusted insurance agent who can give you more details.  A recommended agency, such as Allsure Insurance, will guide you through the selection process.  Having the resource of an established knowledgeable agent can give you the confidence to make an informed insurance selection.

For more detailed information, see our Life Insurance section.


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Life Insurance and Taxes

Posted on April 1, 2015 by

Life Insurance and Taxes

Is life insurance taxable?

Are insurance proceeds taxable?

Is life insurance taxable income?

The above questions are asked by first time and seasoned life insurance clients. It really isn’t surprising that they would wonder about their life insurance proceeds taxable amount.

So, are life insurance benefits taxable?

In short, there is sometimes tax on life insurance and there may be taxes on life insurance. There are some life insurance proceeds taxable by the IRS. Tax on life insurance proceeds, life insurance tax benefits, and life insurance taxable income do have some implication concerning the amount of income tax on life insurance.

Beneficiary Taxes

If your beneficiaries receive the proceeds of a life insurance policy, the benefits will not be included as part of their gross income on their tax reporting. Interest that has been received on that policy would need to be reported in the interest area of your tax report. The sooner you pay off your life insurance loan, the less interest you’ll have to pay.

When someone has a hybrid annuity or life insurance policy with a long term care insurance rider, where long term care benefits are left over, the heirs will get a tax free death benefit. Claims paid from these policies are tax free if the long term care expenses are qualified.

Irrevocable Life Insurance Trust (ILIT)

Life insurance tax is not a reality, but the amount of the proceeds of your policy may increase the amount of taxes payable by your estate unless you form an irrevocable life insurance trust (ILIT).

The ILIT owns your life insurance policy, thereby removing it from your estate.  You would not be able to put the policy back in your own name.  Since it is not “in” your estate, your estate taxes would be lower.

Whole life | Universal Life

Whole life and universal life policies both have deferred tax responsibilities.

Modified Endowment

In the case of a modified endowment contract, the amount of gain over and above the amount paid in is calculated as coming out first and will be taxed at 10% if the funds are taken out before the policy holder is 59 ½ years old.

If the insurance policy is not a modified endowment contract, you may borrow from the policy and not pay tax on the money that you have contributed to the policy.  If you cash out monies over and above what has been paid in, part of that that money is considered ordinary income.

Lapsed Policies

Some young adults allow their life insurance policy to lapse after they have taken a loan from the policy. The accumulated interest is considered taxable income.

Surrender Charges`

Surrender charges might happen if you withdraw cash from your life insurance policy. One of the best things to do is to take a policy loan from your insurance company. The cash value in the policy will be your collateral. If you repay the loan, the amount you borrow is usually not treated as taxable income. You will also avoid surrender charges since you aren’t withdrawing money. Interest on the loan is taxable.


The  subject of the taxability of life insurance is a complex one. The above is a sampling of what is involved in the tax liability for various types of life insurance. Please feel free to give me a call to set up an appointment, so that I can use my expertise to collaborate with you to find the perfect life insurance for you and your spouse.  Not only will you have an understanding of the worth of the policies, but you will also have a clear understanding of the tax situation involved with the various types of policies that you are considering.

Posted in Life Insurance, Tax on insurance., Taxes on Life Insurance., Texas Life and Health Insurance, Types of Insurance, Types of Life Insurance | 0 Comment

Life Insurance-Business Owners-Succession Plan-Selling Company

Posted on February 15, 2015 by

Based on my experience of handing life insurance for business owners throughout Texas, I have decided to share the following information as both a warning and an encouragement for my fellow business owners. I want you to be aware of  factors to consider concerning your life insurance policy.

As a business owner, you have worked hard to build your business or businesses. What will happen when you are no longer able to run your business either because of death or some debilitating health issue?

Your situation is much different for you than for an individual whose income is not determined by their actively running a business that produces most or all of their family’s income.

You need a life insurance policy that will insure that your family is taken care of, while at the same time making sure that they are able to take care of the ownership changes for your business.

There are many factors to consider, whether you need to consider succession planning, the transferal of ownership to the next generation, or the transferal of ownership to a person or persons outside of your immediate family.

Some Costs Involved…

  • Attorney
  • Court Costs
  • CPA
  • Financial Planner

How will you create a fund for your family to more easily deal with this situation? The only viable answer for your family having to deal with this is by providing them with the right life insurance policy.

At this emotional time, there is often friction between family members who are actively involved in the business and those members who are not involved.  By having a death benefit for un-involved family members equal to the value of the share of the business that you leave to involved family members will minimize that friction.

The right life insurance for you as a business owner will also protect your family from having to do what is referred to as a “distressed sale” of your business. If you have used your personal assets as collateral, the right life insurance policy will negate the necessity of your family having to quickly sell the business to cover loan obligations. This quick sale in many cases would cause the business to be sold for a sum that is considerably less than its actual value.

There may be other funding available, but the right life insurance policy will provide both the flexibility and tax benefits that are missing from other funding options.

Your life insurance policy should also provide uninterrupted liquid income during this time, to take care of …

  • Funeral expenses
  • Gratuity for Clergy
  • Estate Taxes
  • Meals for family and guests
  • Possible transportation for out-of-town children or other close relatives
  • Normal family bills.
  • And more unexpected out of pocket expenses

My hope is that this information has made you aware of factors that you, as a Texas business owner need to consider in choosing a life insurance policy.

Posted in Life Insurance, Small Business Insurance, Small Business Owner, Succession Plan, Texas Life and Health Insurance | 0 Comment