Quote:
Originally Posted by jedalton
it's not an investment, it's a loan. the policy is the collateral. you can make anyone your beneficiary weather they loan you any money or not.
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Well, if it is a loan, then the IRS would definitely tax you on any income you made from the loan, including interest. So, the excess in collateral you made would be taxable income. But, if it is a loan, then the beneficiary would only be able to keep part of the life insurance proceeds needed to pay off the loan. The rest would revert back to your estate.