Improve the health of the people of Wisconsin by supporting and strengthening physicians' ability to practice high-quality patient care in a changing environment.

Take a new look
at permanent life insurance

By Kathy Mueller, CLU, ChFC, FIC, LUTCF
Insurance Adviser, Wisconsin Medical Society Insurance & Financial Services, Inc.

People purchase life insurance for many reasons. Most of the time, life insurance is meant to replace income or pay off debt after a person’s death. However, with the passing of the American Taxpayer Relief Act of 2012, it may be a good time to look at permanent life insurance.

The American Taxpayer Relief Act of 2012 increases the marginal income tax rate for high-income earners ($400,000 for a single person, $450,000 for a married couple filing jointly) from 35 percent to 39.6 percent. Taxes on capital gains and dividends also increase from 15 percent to 20 percent for these same people. The Medicare surtax will add another 3.8 percent to the net investment income, making the overall tax rate for capital gains and dividends 23.8 percent! The Medicare surtax also will affect single people earning $200,000 or more and married couples earning $250,000 or more.

What does this have to do with permanent life insurance? Life insurance can not only replace income and pay debts at death, it can be used to enhance your retirement income (you can take money out before age 59½ without penalty, and you are not required to take a minimum distribution at age 70½), pay for children’s college education and provide money for other ventures.

Cash values grow inside of the policy on a tax-deferred basis, while dividends can stay in the policy and increase the cash value and the death benefit. When you take the money out, you can do so on a tax-favored basis. The entire death benefit is paid on a tax-free basis.

Permanent life insurance provides both a living benefit as well as a death benefit, and it may be a good time to look into adding it to your investment portfolio. To learn more, call Wisconsin Medical Society Insurance & Financial Services at 866.442.3810 or e-mail an agent.

Back to March 21, 2013 Medigram