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Discussion Starter #1
Things are looking good, and plans are coming together for some substantial life changes for me in the up-coming year. I will be buying the farm from my dad, and getting married next August. This is something I have long been working toward, as I will be the third generation to own this farm. It is a big financial responsibility, and I don't want to leave my wife with more than she can handle if something should happen to me. I have an idea of how much life insurance I would like, but there are a couple variables I don't know. First, taxes.... Yep, they are inevitable, but how does uncle sam treat something like life a insurance payout? Does it get lumped under unearned income and taxed at 30-something percent? That could make the difference between having enough to leave her comfortable vs still struggling. Also, should I have a portion of it as whole life? Or just do term life and figure it long enough to have most or all of my debts under control? I am just trying to be responsible and not leave her missing my money more than she misses me, should somthing happen. :)

Thanks!
 

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i bet you will find some life insurance people on here to help give you some advice. Good luck!
Bry:patriot:
 

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According to the 2011 Master Tax Guide, "Life insurance contract proceeds paid by reason of death of the insured are generally excluded from gross income. Generally, all amounts payable on the death of the insured are excluded, whether these amounts represent the return of premium paid , the increased value of the policy due to investment, or the death benefit feature."

As always, check with your tax adviser. Also consider any estate taxes that might have to be paid. That's an ever evolving fiasco. Unless you die in 2010. Then there is no estate tax.
 

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Life insurance proceeds are not taxable income.

Term life have usually the lowest premiums.

Usually you can get a locked in rate for 20 years depending on your age, then the premiums rise substantially.

I would say get the highest amount of coverage you can comfortably afford, and don't ever miss a payment.

Good Luck.
 

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as stated, life insurance not taxed...
term has lowest premiums...
you can find policies with level premiums for up to 20 years...

whole life...bad idea. it is presented well, but it bundles savings with life insurance. that creates difficulty knowing where your money is going.

get a policy to cover your insurance needs now. invest separately, invest timely and invest well. use your investments to eventually reduce or eliminate your need for insurance.

whole life will show that it has a monetary value...if you die and the insurance amount is greater than the monetary value, your wife gets the insurance amount, they keep the monetary value. if monetary value is more than insurance amount, you get the monetary value...you don't get the insurance amount in addition. think about that...you're paying for insurance and savings...but if you die, your wife does not get both.

you can purchase a policy that will award you both, but you will pay a higher premium.

agents are compensated based on the size of the premium they sell you...the higher the premium, the higher their compensation. they are also compensated at a higher rate for whole life than term.

nowadays, there are probably several policies that mask this bundling of your insurance with saving, and they will look impressive, but separate the two.

i'd suggest speaking to several...and i don't mean just two...several agents in your area and see what they present you with. you need one that looks at the coverage that protects your wife and family...and you need a good savings plan because if you are like me...i have insurance but i plan on being around for a good long time.

good luck!
 

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Life insurance proceeds are not taxable income.

Term life have usually the lowest premiums.

Usually you can get a locked in rate for 20 years depending on your age, then the premiums rise substantially.

I would say get the highest amount of coverage you can comfortably afford, and don't ever miss a payment.

Good Luck.
Simpleman is correct. Life insurance proceeds are not taxable, it's legislation that was worked out in the '30's. They also avoid probate so no greedy creditors or Uncle Sam can't get their hands on it. He's also correct about term insurance being very reasonable and if you are just looking to cover a mortgage for a specific amount of time, it's your best bet. There are many different forms of life insurance out there. Whole life, (expensive but guaranteed) and Universal Life, kind of a hybrid of term and whole life and would fall in the middle of the pricing catagory.

Insurance companies are going to look at a few things when considering you. Your overall health, your family history, and the financial loss to your beneficiary when you pass. All of these things are considered when your application is "underwritten."

There are many way to fund a life insurance policy, if you are a business owner, you could p.m. me and I could tell you a neat way to fund a policy and save some money for retirement at the same time. I'm NOT licensed in your state so please don't think I'm trying to sell you something. I generally keep my business off of this site but you asked...Hope this helps!
Marty:mosh:
 

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Discussion Starter #7
Not taxable is a good thing. The government did something that makes sence for a change!!! (although it was 80 years ago....) So if I understand correctly, it is off-limits to anyone trying to collect debts as well? Say I get cancer and leave a million in hospital bills, they can take everything I got, but she would still get the insurance payout? Thanks for the advice, guys. So nice to have such a diverse group to get information from, without being "sold" to. :)
 

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Not taxable is a good thing. The government did something that makes sence for a change!!! (although it was 80 years ago....) So if I understand correctly, it is off-limits to anyone trying to collect debts as well? Say I get cancer and leave a million in hospital bills, they can take everything I got, but she would still get the insurance payout? Thanks for the advice, guys. So nice to have such a diverse group to get information from, without being "sold" to. :)
You're correct, your debt won't dissapear because your deceased, but they can't touch the settlement, (death benefit). If you haven't already, it would be a good idea for you to sit down with a lawyer and put a living trust together. Costs will vary on these but usually somewhere between $1500-$2000. Owning land and farm equipment and everything that goes along with a farm means having an estate. I've seen families torn apart when there is money or land left behind. It's usually the legal system that ends up with most of the money then. By planning ahead you will make sure that your assets are transferred where you want and not the court.
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What mdolph said is correct. The debt does not disappear. However, how you have your estate and trusts set up makes all the difference in the world. Also, depending on the size of the estate, the estate may need to buy additional insurance (ILET) to pay whatever estate taxes that might be owed. This way, assets won't have to be sold to pay the tax.
 

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I currently sell life and health products all day long. I am an agent working out of Chattanooga. If you want to PM me with any questions I can probabyl get them answered for you.
 
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