Four things worth knowing before you buy.
The Check flags these from your answers. Each one is legal. Each one costs families money every year.
Funding too fast can flip the tax rules
You pay into a cash value policy. You pay too much, too fast. You pass the federal 7-pay limit. It becomes a modified endowment contract. Money out is taxed on gains first. A 10 percent penalty can apply. That penalty is before age 59 and a half. A single premium policy is always a MEC.
A policy loan shrinks the payout
The loan comes off the face amount. Unpaid interest comes off too. Cash value is not paid on top. It helps fund the face amount. So a loan left unpaid shrinks the payout.
How money arrives is a choice
Straight life pays most per month. It stops when the beneficiary dies. Nothing is left for anyone else. Some options carry the word certain. They guarantee a set period. Or a set amount. One lump sum can be spent in a year. Monthly payments last.
Job coverage can end with the job
Group coverage is tied to your job. Leave the job, lose the coverage. For coverage over $50,000, the IRS's table cost of the part over $50,000 counts as income. You pay tax on it. I treat group coverage as a bonus. It is not the whole plan.
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