Posted by (insurGuru column©️: Is life insurance an asset? ) Although it has been repeatedly emphasized that life insurance is first and foremost an insurance product, emphasizing the protection function for individuals or families in the United States.
Take a life insurance policy with a cash value function as an example. The preferential withdrawal policy for tax reduction and exemption is essentially a commercial company. After the government assumes part of the government's social pension responsibilities, the government transfers the benefits to the commercial company.This kind of transfer of benefits is not unlimited. Therefore, the IRS will carry out the MEC of the amount of each insurance policy with cash value appreciation space.1set up.
But in the actual marketing process, although the truth can be explained to the customer, the customer accepts the more questions and measures in his heart.Is life insurance an asset?Is this a good investment?Today, in conjunction with the interpretation of the 2018 House of Representativeslife insurance和Elderly careA proposal by to illustrate this problem.
What are assets?
Assets are the resources that you invest in capital and hope to get a return on investment.
For most Americans, houses are their only assets.When people finally sell their houses, they can expect to get a return in the transaction and get their money back.But assets may also include other financial instruments, such as securities (stocks and bonds), deposit accounts, intangible assets such as intellectual property, and tangible assets such as vehicles, precious metals, and art.Because of the transactions and circulation in the market, cryptocurrencies like Bitcoin are often regarded as assets, as are investments in fiat currencies.
Is life insurance an asset?
This question is quite difficult to answer.Because from the strict interpretation of the original legislation, insurance is only the transfer of risks, and the relevant government legislation, insurance product types and the market are constantly changing.In this dynamic process, it is impossible to give a fixed answer.
However, from the perspective of assets, secondary market transactions, likeTerm life insurance(Term), it is difficult to count as an asset, because it is more difficult to trade again.But with cash value functionWhole life insurance, Because of the "savings" characteristic of the product, it may be regarded as an asset.However, once consumers regard such insurance products as assets subjectively in their minds, the next question arises: "Can I sell this asset?How much money can be sold?"The long-term care account bill formally submitted at the end of 2018 can answer this question from a legislative perspective. At the same time, we can also get a glimpse ofAmerican Life InsuranceThe development status of the industry and related legislation.
Long-term Care Account Act
HR 7203 proposal2(AKA: Long-Term Care Account Act, Long-Term Care Account Act), Submitted by Representative Kenny Marchant (R-TX) and Representative Brian Higgins (D-NY) at the end of 2018.The proposal will allow seniors under any physical condition to use the life insurance policy they already have to fund various medical and health services, including paymentLong-term careFees and paymentLong-term care insuranceOf premiums.
The bill will authorizeSell life insurance policies at a market price, And transfer the transaction settlement amount tax-free to a licensed account dedicated to medical and health care.According to the legislative proposal, if the funds are used for designated expenditures, there will be no taxation.Unauthorized expenditures will be subject to personal income tax levies and fines.In the account, any undistributed amount, including investment income, is not taxed while the account holder or his spouse is alive.
2017 National Association of Insurance Commissioners (NAIC) White Paper3It is determined that life insurance settlement transactions are used as "a source of funds for the elderly to pay for their long-term care needs." (one option seniors might use to generate resources to pay for their long-term care needs.) "3.
The report shows that “policy holders sell their policies,Get a lump sum of money.According to research conducted by the government and universities, the amount of this money is higher than the amount of money they get after leaving the insurance policy or surrendering the insurance, usually 4 times or even higher. "
in conclusion
In the real market, the settlement of life insurance transactions has always existed.This article only explains to consumers from the perspective of the latest bill that the U.S. life insurance industry andSocial pension,Retirement medicalThe current development trend of the mechanism.
If the bill is officially passed, it will become529 Education Savings Account(529 Blueprint) After the market is supplemented, the life insurance market will inevitably be compared with traditional health savings accounts (HSA) The market is complementary, forming a more complete retirement fund security system for American families and individuals.
With the continuous development of the market, the continuous upgrading of products, the mainstream lifelongLife insuranceThe product is becoming a cross-market and diversified financial tool.Life insurance policies, especially whole-life life insurance policy products with cash value function, are not an asset, or whether it is a special asset in the field of personal or family pension protection, the answer is different.
Finally, there are unavoidable omissions in the article, sincerely please go with you, readers can criticize and correct through the following contact information.
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appendix:
01. MEC, full name Modified Endowment Contract. It refers to whether the accumulated premium amount in a life insurance policy exceeds the boundary defined by the federal tax law.Simply put, if the premium exceeds this value, it will be recognized as an investment product, not an insurance product, and thus lose tax incentives.
02. HR7203 – Long-Term Care Account Act, https://www.congress.gov/bill/115th-congress/house-bill/7203 ,House – Ways and Means, 11/30/2018
03. Private Market Options for Financing Long-Term Care Services, https://www.naic.org/documents/ NAIC, 07/19/2017
