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  #61  
Old 06-22-2020, 08:20 AM
jedalton jedalton is offline
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Originally Posted by jedalton View Post
My friend is just a beneficiary not an irrevokable beneficiary and in case you don't know how insurance works the money is paid directly to the beneficiaries there is no probate or anything else
Consent Must Be Given By An Irrevocable Beneficiary Before Being Removed From A Life Insurance Policy | HMC Lawyers
  #62  
Old 06-22-2020, 08:22 AM
jedalton jedalton is offline
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Originally Posted by Don5154 View Post
One word “ANNUITIES”
expenses and penalties will eat you up. best rate I could find with guarantee is 3.5%.
  #63  
Old 06-22-2020, 08:23 AM
retiredguy123 retiredguy123 is offline
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Originally Posted by jedalton View Post
that's if you transfer, if your beneficiary is tax free
I disagree. I don't think the IRS would see it that way. If you are investing money to become the beneficiary in order to make money, I think the IRS would consider the income to be taxable. Paying money to become an irrevocable beneficiary has the same financial effect as transferring the policy.
  #64  
Old 06-22-2020, 08:26 AM
jedalton jedalton is offline
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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.
  #65  
Old 06-22-2020, 08:27 AM
jedalton jedalton is offline
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already had 20 interested parties and meeting with 2 of them today. Some people can see the benefit of this deal.
  #66  
Old 06-22-2020, 08:39 AM
retiredguy123 retiredguy123 is offline
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Originally Posted by jedalton View Post
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.
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.
  #67  
Old 06-22-2020, 10:10 AM
jedalton jedalton is offline
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Originally Posted by retiredguy123 View Post
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.
can always make it a gift
  #68  
Old 06-22-2020, 10:18 AM
ColdNoMore ColdNoMore is offline
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Originally Posted by FredJacobs View Post
I used to teach life insurance law to insurance agents. Life insurance policies are payable ONLY to the beneficiary. An "irrevocable beneficiary" cannot be changed by the owner of the policy without the approval and knowledge of the beneficiary.

Life insurance proceeds are free of income tax and cannot be attached by any of the decedent's creditors. However, they can be claimed by the beneficiary's creditors.

Things to look for and consider -

A. What kind if policy is this - Whole Life, Universal or Term?
B. If it is Whole Life or Universal, is there any cash value and is the cash value sufficient to pay the premiums?
C. If it is Term, the owner of the policy could stop making premium payments because it is forever increasing and the policy could be cancelled. Also, depending on when the policy was issued and in which state, the policy may expire at age 80, 85 or 99.

2. The life expectancy of a healthy 79 year old male is about 13 years. Should the owner live that long, the car will be 16 years old - if he still owns it. Will you get what ever car he owns at the time?

3. This is like buying a 13 year non-cancellable, no early withdrawal CD. Investing $20,000 and waiting 13 years for payout of $40,000 is an annual rate of return of 5.2%. Not too bad a rate of return. If he lives longer, the rate goes down.

4. Mr. Dalton may be better served if he sells his policy for a cash settlement.

Excellent post and a great attempt on education...regarding life insurance.


P.S. I think I'll take a pass on this "opportunity."
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