For many people, the first thought that comes to mind when they think of insurance is costly premiums. But as April 15 approaches, remember that some insurance products come with tax advantages that can save you money.
MarketWatch:
Consider these 5 insurance tax reminders by the nonprofit Life and Health Insurance Foundation for Education (LIFE). Some of the benefits include using various types of insurance to pay your estate taxes, helping you accumulate money on a tax-free or tax-deferred basis and even lowering your taxable income.
1. Life insurance death-benefit proceeds are generally income-tax free. As long as your beneficiaries are specifically named, they won’t have to pay income taxes on the proceeds they receive from your life insurance policy.
2. The premiums you pay for long-term-care insurance may be tax deductible. 65% of 65-year-olds will require long-term-care services at some point in their lives. For the many who will require services for several years or more, the cost can be astronomical, so it often makes sense to consider long-term-care insurance. Depending on your age, adjusted gross income and other medical expenditures, the premiums you pay may be tax deductible on your personal income tax. If you are self-employed, there are even greater tax advantages by paying your insurance premiums through your business.
3. Cash values that accumulate in permanent life insurance policies are income tax-free or deferred. Carry on reading…
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