Posts Tagged ‘life insurance’
Posted by William Byrnes on October 25, 2010
Valuing a donated life insurance policy can be tricky when taking a charitable contribution deduction. Detailed IRS guidance on insurance policy valuation has been confined to other scenarios, such as where a policy is sold or included in an estate. Also complicating policy donation is the requirement that a qualified appraisal of the donated policy be included with the taxpayer’s return.
For in-depth analysis of the topic of charitable giving, see Advisor’s Main Library Section 1 F—Estate Planning Through Charitable Contributions
Read this complete article at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).
We invite your questions and comments by posting them at AdvisorFYI, or by calling the Panel of Experts.
Posted in Estate Tax, Insurance | Tagged: Charitable contribution, Donation, insurance, Insurance policy, Internal Revenue Service, life insurance, term life insurance, Whole life insurance | Leave a Comment »
Posted by William Byrnes on October 9, 2010
Why is this Topic Important to Wealth Managers? Presents an introduction into the taxation of U.S. life insurance companies. Provides insight for wealth managers considering advanced planning techniques involving the use of life insurance companies.
Congress has determined, generally, that insurance companies by issuing insurance contracts are serving the public good. Moreover, Congress has determined that the tax accounting applicable to corporations does not adequately align to the operations of the insurance industry. Thus, to distinguish insurance companies, Congress created a special chapter of the Internal Revenue Code (subchapter “L”) applicable only for them. Subchapter L is divided into Section 801 to 848 of which 801 to 818 address the taxation of lile insurance companies.
By example, because of the nature of the life insurance business, in that liabilities carry long into the future, Congress has afforded special deductions to this class. To avoid potential reserve deficiencies by recognizing income (and therefore incurring a present tax liability) when premiums are collected, Congress essentially allows underwriting gains to occur once the insurance liability obligations have expired.
Let’s take a look at the Code specifically to see how these mechanics actually work. First and foremost, pursuant to IRC Sec. 801 a life insurance company is taxed at the same rates as other corporations. These rates can be found in IRC § 11.
A life insurance company means under IRC § 816(a), “ an insurance company which is engaged in the business of issuing life insurance and annuity contracts”, generally, as well as accident or health contracts, so long as, the company’s “life insurance reserves, plus unearned premiums” on “noncancellable” policies, “comprise more than 50 percent of its total reserves.”
Read on about Subchapter L: Life Insurance Companies
Posted in Tax Policy | Tagged: Agents and Marketers, Business, Business and Economy, Financial services, insurance, Internal Revenue Code, Life, life insurance | Leave a Comment »
Posted by William Byrnes on October 3, 2010
An insurer recently won a major victory when the U.S. District Court for Delaware voided a life insurance policy that was purchased as part of a STOLI transaction. The case—Principal Life Insurance Co. v. Lawrence Rucker 2007 Insurance Trust—is significant because the court voided the policy for lack of an insurable interest based on the finding of insured’s intent to sell, even though the insured had not identified a particular purchaser for the policy at the time it was issued.
For the complete analysis of this development by our Experts Robert Bloink and William Byrnes, please read the article via your AdvisorFX subscription atRecent STOLI Case Is a Big Win for Insurers
For in-depth analysis of STOLIs, see Advisor’s Main Library Section 19.6 Life Settlements B—The Life Settlement Industry: Stranger-Originated Life Insurance (STOLI).
For in-depth analysis of the topic of insurable interest, see Advisor’s Main Library Section 20 Beneficiaries And Settlement Options B—Insurable Interest: New York Insurance Department Invalidates STOLI Scheme For Lack of Insurable Interest
After reading the analysis, we invite your questions and comments by posting them below, or by calling the Panel of Experts.
Posted in Uncategorized | Tagged: Business, Financial services, insurance, Insurance policy, Life, life insurance, Life settlement, Stranger-originated life insurance | Leave a Comment »
Posted by William Byrnes on October 2, 2010
Author: Benjamin S. Terner
Why is this Topic Important to Wealth Managers? Provides an overview of one useful tool for affluent clients. Presents offshore private placement life insurance considerations wealth managers may consider when discussing this topic with clients.
As a brief review, private placement variable universal life insurance may allow individuals “the ability to select asset management beyond the limited asset-management choices offered in retail variable life insurance products.”
Generally speaking, one benefit derived from the use of private placement policies “in the high-net-worth market” is that the policy is essentially an “investment vehicle, optimally used for the most tax-inefficient asset classes in an investor’s portfolio.” Therefore, some common goals for wealth managers structuring transactions as private placement life contracts: “are to take advantage of the income tax and possible estate tax savings, to maximize investment choices, and to incur as little cost as possible in doing so.”
Please see the AdvisorFYI blog for the entire blogticle.
Posted in Insurance | Tagged: Asset, Business, Financial services, insurance, Investment, life insurance, Private placement, Private placement life insurance | Leave a Comment »
Posted by William Byrnes on September 27, 2010
Life insurance ownership has hit a fifty-year low, according to the August-released Trends in Life Insurance Ownership, a LIMRA study administered once every six years. But do the economic clouds have a silver—or better yet, gold—lining?
Today’s analysis by our Experts Robert Bloink and William Byrnes is located at AdvisorFX Journal Life Insurance Ownership Hits Fifty-Year Low
Posted in Insurance | Tagged: Agents and Marketers, Business, Business and Economy, Financial services, insurance, Life, life insurance, United States | Leave a Comment »
Posted by William Byrnes on September 22, 2010
Why is this Topic Important to Wealth Managers? Discusses estate tax considerations in regards to life insurance policies. Also, includes a detailed dialogue of the incidents of ownership concept.
What do most wealth managers try to avoid when planning with life insurance and trusts?
That the Gross Estate for Estate Tax calculations would include the death benefit from the policy in the estate.
What are some common ways to avoid this dilemma when using a trust and life insurance in regards to estate planning?
For the answer to this question, and planning analysis, see the blogticle at AdvisorFYI
Posted in Estate Tax, Insurance, Trusts | Tagged: Business, Death, estate planning, Estate tax in the United States, Insurance policy, law, life insurance, United States | Leave a Comment »
Posted by William Byrnes on September 21, 2010
Why is this Topic Important to Wealth Managers? The terminology associated with common estate planning techniques is generally misguided. Provides a better understanding of the tax and legal implications, on behalf of the client’s estate plans, of trusts that purchase life insurance.
One commentator states “If the practitioner would examine either the Internal Revenue Code or the Treasury Regulation designed to interpret the Code, they will not find the use of the term ‘Insurance Trust’ or the term ‘ILIT.’” For a detailed analysis of the ILIT see the Main Library Section 4. Estate Planning Techniques H—Life Insurance Trusts.
For the complete blogticle and its analysis, see AdvisorFYI
Posted in Estate Tax, Insurance, Trusts | Tagged: Business, estate planning, Internal Revenue Code, life insurance, Life insurance trust, tax, Treasury Regulation, United States | Leave a Comment »
Posted by William Byrnes on September 21, 2010
Why is this Topic Important to Wealth Managers? Estate Planning almost always involves some consideration of legal trust(s). It is essential that wealth managers understand the purpose for trusts and the ways trusts can be used in a comprehensive financial plan. By example, ILITs can be “an effective estate planning device” because, “life insurance proceeds [are not included] in the insured’s estate.”
We invite you to read about some common uses of trust in estate planning, such as Irrevocable Life Insurance Trusts, and analysis at AdvisorFYI.
Posted in Insurance | Tagged: estate planning, Estate Planning and Probate, financial planning, ILIT, insurance, life insurance, Wealth Management | Leave a Comment »
Posted by William Byrnes on September 19, 2010
Life insurance ownership has hit a fifty-year low, according to the August-released Trends in Life Insurance Ownership, a LIMRA study administered once every six years. But do the economic clouds have a silver—or better yet, gold—lining?
Today’s analysis by our Experts Robert Bloink and William Byrnes is located at AdvisorFX Journal Life Insurance Ownership Hits Fifty-Year Low
After reading the analysis, we invite your questions and comments about policies maturing after age 100 by posting them below, or by calling the Panel of Experts.
Posted in Insurance | Tagged: Agents and Marketers, financial planning, Financial services, insurance, Life, life insurance, producers, Wealth Management | Leave a Comment »
Posted by William Byrnes on September 12, 2010
The IRS’ Rev. Proc. 2010-28 finally provides guidance on life insurance contracts that now include maturity dates extending well beyond the insured’s 100th birthday. The IRS Revenue Procedure addresses the actuarial realties of increased longevity, but more importantly it helps clarifies when policy distributions will or will not be taxable to the insured.
Today’s analysis by our Experts Robert Bloink and William Byrnes is located at AdvisorFX Journal Safe Harbor for Policies Maturing After Age 100
Posted in Compliance, Insurance | Tagged: elderly care, life insurance | Leave a Comment »
Posted by William Byrnes on September 10, 2010
This article explores the development of life insurance in America through the Civil War. Many common factors from the old policies and companies are still apparent in the system of Life Insurance underwriting today, including producers, commissions, and premium financing.
Please read my blogticle at Advisor FYI The History of Life Insurance in America: Producers, Commissions, & Premium Financing
Posted in Legal History | Tagged: history, life insurance | Leave a Comment »
Posted by William Byrnes on September 9, 2010
This article continues the exploration of life insurance in America. Here the development of life insurance companies as compared to individuals covering the risk leads to new underwriting standards and objectives.
Please read my blogticle at Advisor FYI The History of Life Insurance in America: Insurance Companies
Posted in Legal History | Tagged: history, life insurance | Leave a Comment »
Posted by William Byrnes on September 8, 2010
This article explores the new development of actuarial analysis to improve life underwriting standards. The life companies writing insurance in the early period of America experienced significant growth and created the beginnings of the policies we recognize today.
Please read my blogticle at Advisor FYI The History of Life Insurance in America: New Standards
Posted in Legal History | Tagged: history, life insurance | Leave a Comment »
Posted by William Byrnes on September 7, 2010
This article continues the exploration of life insurance in America. In this chapter we follow the development of life insurance itself and its growth and development from a simple concept to complex arrangements. Learn about how the creation of insurance markets in the Colonies led to the development of life insurance as we know it today.
Please read my blogticle at Advisor FYI The History of Life Insurance in America: Development of a New Product
Posted in Legal History | Tagged: history, life insurance | Leave a Comment »
Posted by William Byrnes on September 6, 2010
In a turn from addressing weekly subjects like ‘Alternative Risk Transfer’ and ‘Independent Contractors’, this week our AdvisorFYI blog will provide the financial advisor with the history of life insurance in America. AdvisorFX Journal will focus on avoiding transfer taxes with a capitalized entity sale to a defective grantor trust.
This article explores the beginnings of life insurance in America. The foundations of life insurance is actually found in other areas of risk management at the end of the 18th century. Follow along as we take a tour though history and examine how insurance evolved to be the way it is today. Read it as The History of Life Insurance in America: The Beginning
Posted in Legal History | Tagged: history, life insurance | Leave a Comment »
Posted by William Byrnes on August 22, 2010
As STOLI (stranger originated life insurance) transactions have receded due to nearly unanimous condemnation of the practice, a wave of Stranger Originated Annuities (STOAs) is growing.
Today’s analysis by our Experts Robert Bloink and William Byrnes is located at AdvisorFX Journal STOLI to STOA: First Drops in a Gathering Storm
Posted in Uncategorized | Tagged: annuities, life insurance, STOA, STOLI | Leave a Comment »
William Byrnes' Tax, Wealth, and Risk Intelligence 