worth tax benefits of life ins

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The economics of wealth has changed: New tax laws are taking a bigger bite out of income from just about every avenue of growth and accumulation. Tax rates have increased for higher-income earners. Capital gains tax rates have gone back up to 20 percent, and now, if your adjusted gross income is over $200,000 ($250,000 for those married and filing jointly), the Medicare surtax of 3.8 percent is applied to your net investment income over the threshold. What’s left?

Is it time to rethink your overall savings strategy? Higher tax rates may be eating into your savings. So, as a high-income earner, you cannot defer enough even if you have access to qualified retirement plans. That’s what makes life insurance a smart solution.

Typically, life insurance has been viewed primarily as a vehicle for financial protection for your family when you die; that benefit remains. That being said, life insurance can also be a resource with significant tax advantages for protecting your wealth and accumulating funds for future income.

Here are life insurance advantages that work to your benefit:

• significant contributions tailored to fit within your financial plan;• death benefit for your family is

generally income-tax-free;1 • the ability to purchase within a

trust in order to keep the policy’s death benefit from being subject to estate taxes;• a death benefit providing liquidity

to pay potential estate tax liability;• access policy’s cash value on a tax-

free basis;2 • tax-deferred earnings.While life insurance provides an

income-tax-free death benefit, in this higher-income-tax environment, an advantage is that increases in the policy cash value are not subject to income tax, capital gains tax or the Medicare surtax.

Life insurance offers additional financial flexibility:Today’s life insurance policies may also offer benefits giving you the financial flexibility to react to changes:• the potential for supplemental

savings and growth through indexed or variable universal life products; • access to your funds for medical

costs and care under a living-benefits or long-term-care rider option and protect-

ing other assets from the financial drain of medical expenses;

• available surrender provisions act as exit strategies to receive all or some of the premiums paid should you no longer need the policy.

Some additional planning tips to limit your exposure to increased taxes include managing your modified adjusted gross income (MAGI) by taking advantage of qualified retirement plans, shifting income to another tax year and funding a health savings account, if available. Also, you can minimize your net investment income through a tax-efficient portfolio, harvesting capital losses to offset capital gains, or using installment sales to sell highly appreciated property.

As you and your financial advisor review your current situation and discuss your plans, consider the tax advantages of life insurance, which can offer you tax-deferred growth, tax-free access to a policy’s cash value and the ability to help protect your legacy for your family. These are just some of the financial solutions that can help you offset and protect your wealth from the impact of higher taxes.

Transamerica Life Insurance Company Claire Durand, CFP®, ChFC®, CLU®, CRPC®

Director, Advanced Marketing

Los Angeles, CA Leading Insurance Advisor

What are the tax-savings benefits of life insurance?By Claire Durand

1 IRC Sec. 101(a)(1). Please consult your tax advisor on all tax questions.2 Loans and withdrawals will affect the cash value of the policy and could affect the death benefit and may be subject to federal income taxes and/or company-imposed surrender charges. Please consult your tax advisor on all tax questions.

Transamerica Life Insurance Company, Transamerica Financial Life Insurance Company (collectively “Transamerica”), and its representatives do not give tax or legal advice. This material is provided for informational purposes only and should not be construed as tax or legal advice. Clients and other interested parties must be urged to consult with and rely solely upon their own independent advisors regarding their particular situation and the concepts presented here. Discussions of the various planning strategies and issues are based on our understanding of the applicable federal tax laws in effect at the time of presentation. However, tax laws are subject to interpretation and change, and there is no guarantee that the relevant tax authorities will accept Transamerica’s interpretations. Additionally, this material does not consider the impact of applicable state laws upon clients and prospects. Although care is taken in preparing this material and presenting it accurately, Transamerica disclaims any express or implied warranty as to the accuracy of any material contained herein and any liability with respect to it. This information is current as of June 2014. Life insurance policies are issued by Transamerica Life Insurance Company, Cedar Rapids, IA 52499, or Transamerica Financial Life Insurance Company, Harrison, NY 10528. All policies may not be available in all jurisdictions.

Transamerica_WOR31.indd 106 7/18/14 9:57 AM

The economics of wealth has changed: New tax laws are taking a bigger bite out of income from just about every avenue of growth and accumulation. Tax rates have increased for higher-income earners. Capital gains tax rates have gone back up to 20 percent, and now, if your adjusted gross income is over $200,000 ($250,000 for those married and filing jointly), the Medicare surtax of 3.8 percent is applied to your net investment income over the threshold. What’s left?

Is it time to rethink your overall savings strategy? Higher tax rates may be eating into your savings. So, as a high-income earner, you cannot defer enough even if you have access to qualified retirement plans. That’s what makes life insurance a smart solution.

Typically, life insurance has been viewed primarily as a vehicle for financial protection for your family when you die; that benefit remains. That being said, life insurance can also be a resource with significant tax advantages for protecting your wealth and accumulating funds for future income.

Here are life insurance advantages that work to your benefit:

• significant contributions tailored to fit within your financial plan;

• death benefit for your family is generally income-tax-free;1 • the ability to purchase within a

trust in order to keep the policy’s death benefit from being subject to estate taxes;

• a death benefit providing liquidity to pay potential estate tax liability;

• access policy’s cash value on a tax-free basis;2 • tax-deferred earnings.While life insurance provides an

income-tax-free death benefit, in this higher-income-tax environment, an advantage is that increases in the policy cash value are not subject to income tax, capital gains tax or the Medicare surtax.

Life insurance offers additional financial flexibility:Today’s life insurance policies may also offer benefits giving you the financial flexibility to react to changes:

• the potential for supplemental savings and growth through indexed or variable universal life products;

• access to your funds for medical costs and care under a living-benefits or long-term-care rider option and protect-

ing other assets from the financial drain of medical expenses;• available surrender provisions act

as exit strategies to receive all or some of the premiums paid should you no longer need the policy.

Some additional planning tips to limit your exposure to increased taxes include managing your modified adjusted gross income (MAGI) by taking advantage of qualified retirement plans, shifting income to another tax year and funding a health savings account, if available. Also, you can minimize your net investment income through a tax-efficient portfolio, harvesting capital losses to offset capital gains, or using installment sales to sell highly appreciated property.

As you and your financial advisor review your current situation and discuss your plans, consider the tax advantages of life insurance, which can offer you tax-deferred growth, tax-free access to a policy’s cash value and the ability to help protect your legacy for your family. These are just some of the financial solutions that can help you offset and protect your wealth from the impact of higher taxes.

Transamerica Life Insurance Company Claire Durand, CFP®, ChFC®, CLU®, CRPC®

Director, Advanced Marketing

Los Angeles, CA Leading Insurance Advisor

What are the tax-savings benefits of life insurance?By Claire Durand




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How to reach Claire Durand

I can be reached at 877.238.6758 and look forward to hearing from you.

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Transamerica Life Insurance Company 1150 South Olive Street, T-26, Los Angeles, CA 90015 877.238.6758

[email protected]

Websitewww.transamerica.com

Professional Services ProvidedExpert help with: estate/legacy planning, wealth transfer strategies, retirement planning, business succession planning, executive bene� ts, charitable legacy planning and planning for foreign nationals

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“Life insurance can also be a resource with significant tax advantages for protecting your wealth and accumulating funds for future income.” —Claire Durand



107W O R T H . C O M A U G U S T - S E P T E M B E R 2 0 1 4

Transamerica’s experts leverage years of experience to offer life insurance solutions for the issues that are important to today’s consumers, including complex U.S. tax and estate-planning issues, charitable donation legacies, business planning and the special needs of a blended family or foreign national client. Our goal is to help independent general agents and producers be the best advocates possible for their clients. Together, we can create more secure tomorrows. As a seasoned financial planner, Claire Durand leverages her experience to manage Transamerica’s advanced marketing team. Ms. Durand has a talent for taking complicated concepts and giving them a sound sales focus when consulting with distributors. She also shares her expertise on how producers can avoid pitfalls, overcome objections and keep clients interested.

About the Transamerica Experts

How to reach

I can be reached at 877.238.6758 and look forward to hearing from you.

“Life insurance can also be a resource with significant tax advantages for protecting your wealth and accumulating funds for future income.”

Claire Durand


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Transamerica Life Insurance Company is featured in Worth® 2014 Leading Wealth Advisors™, a special section in every edition of Worth® magazine. All persons and firms appearing in this section have completed questionnaires, have been vetted by an advisory group following submission by Worth®, and thereafter paid the standard fees to Worth® to be featured in this section. The information contained herein is for informational purposes, and although the list of advisors presented in this section is drawn from sources believed to be reliable and independently reviewed, the accuracy or completeness of this information is not guaranteed. No person or firm listed in this section should be construed as an endorsement by Worth®, and Worth® will not be responsible for the performance, acts or omissions of any such advisor. It should not be assumed that the past performance of any advisors featured in this special section will equal or be an indicator of future performance. Worth®, a Sandow Media publication, is a financial publisher and does not recommend or endorse investment, legal or tax advisors, investment strategies or particular investments. Those seeking specific investment advice should consider a qualified and licensed investment professional. Worth® is a registered trademark of Sandow Media LLC. See “About Us” for additional program details at http://www.worth.com/index.php/about-worth.

Claire Durand, CFP®, CLU®, CRPC® Director, Advanced Marketing

Transamerica Life Insurance Company1150 South Olive Street, T-26

Los Angeles, CA 90015Tel. 877.238.6758

[email protected]

worth tax benefits of life ins

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