Are Life Settlements Taxable? This is a complex question. Life settlement proceeds may be taxable. The IRS ruled that any life insurance settlements completed on or after August 26, 2009 may be subject to Revenue Ruling 2009-13 life settlement taxation guidelines. However there are a few tax strategies that can be used to possibly have your life insurance settlement go from a taxable item into a tax deduction. Two of the most popular ones uses are named the Charitable Installment Bargain Sale and the Installment Sale.
Are Life Settlements Taxable? There are several items to consider when using one of these strategies to determine whether life insurance settlements are taxable. Some of these are the amount of the settlement, your annual premium payments, and the difference between the cash surrender value and the annual premium on the policy.
Generally, anyone over age 65 who has $50,000 or more in life insurance coverage that is beyond the period of contestability may qualify for a Life Settlement regardless of health condition.
While most types of policies can be purchased, the most common are universal life, survivorship, whole life, convertible term, and variable life.
The amount of settlement offered for a life insurance policy will determined by a number of factors, including, but not limited to, the age and medical condition of the insured, type of insurance policy, insuring company rating, and cost of keeping the policy in force.
Are Life Settlements Taxable? There are so many things to consider, always be sure to seek out information regarding whether your life insurance settlement is taxable or not from a professional. If you do not have a tax adviser you should seek one out. Click on the LIVEpdq link at the top of this page for more information or to have one of our representatives contact you regarding your life settlement.