Life insurance can be a complicated topic. In most cases, the death benefit paid out by a life insurance policy is not taxable.
However, there are some situations in which the death benefit may be subject to taxes. One such situation is known as the "Unholy Trinity."
In this blog post, we will discuss what the Unholy Trinity is and how it affects life insurance policies.
What is the Unholy Trinity?
The Unholy Trinity is when the owner, insured, and beneficiary of a life insurance policy are different people. This happens when the death benefit from the life insurance policy is taxed.
The reason for this is that the death benefit is considered to be part of the estate of the deceased person. When the estate is taxed, the death benefit is included in that taxable amount.
How to Avoid the Unholy Trinity
There are ways to avoid the Unholy Trinity situation. One way is to make sure that the owner, insured, and beneficiary are all the same person.
Another way is to have a life insurance policy that is not part of your estate (a "non-probate" policy).
Contact EGGRS Life Insurance
If you have any questions about whether or not your life insurance policy is subject to taxes, please consult with a qualified tax professional.
EGGRS understands the importance of preparing for unexpected changes while keeping your busy schedule in mind, so we have created an efficient process that anyone can follow.
Our ideal, uncomplicated process allows you to do everything online, including requesting life insurance coverage and receiving it within 20-30 business days. Our services include term life insurance, risk differentiating underwriting, request a quote, and free calculators. Contact EGGRS for more information!