Life insurance enjoys similar income tax attributes as Roth IRAs. Structured properly, premiums are paid into the policy after tax, earnings in the cash value and distributions therefrom (withdrawals and policy loans) are not included in the policy owner’s gross income, and death benefit proceeds are generally not included in the beneficiary’s gross income. Many high-income-earner and high-net-worth taxpayers cannot qualify for Roth IRAs, may be limited with how much they can contribute to a Roth 401(k), or may soon be forced to take required minimum distributions from “mega IRAs” and “mega Roth IRAs” (such as what was included in the House Ways and Means Committee proposed tax increases released on 9/13/2021).  For these taxpayers, cash value life insurance can provide powerful, Roth-like income tax benefits to build and preserve wealth. This session will examine how cash value life insurance can act as an “unlimited Roth alternative” for these affluent taxpayers to provide valuable death benefit protection and grow wealth tax-efficiently to access during life. We’ll also include a detailed analysis of the effect of policy changes on cash value accumulation compared to the taxes on a traditional investment portfolio.  

Is the conventional wisdom about cash value life insurance in this regard right or wrong?  This presentation will help answer this question, with the underlying math to support it.
 
Learning Objectives:

• Recall the inner workings of cash value life insurance including its tax attributes and economics


• Identify how cash value life insurance can be positioned as an alternative to a Roth for high-income-earning clients


• Recognize how cash value life insurance can compare to, and complement, a traditional investment portfolio