We are all required to pay our fair share of taxes. If we over pay taxes, or pay more taxes then necessary, this is a very inefficient use of your money. When teaching families how to be more efficient with their money, we look at the tax consequences of various savings vehicles. Many families are very surprised by the tax favorability of a properly structure, whole life insurance contract. There are three tax advantages to whole life:
Your beneficiaries don't have to pay income tax on the death benefit.
The cash value in the policy grows tax deferred.
Loans, collateralized by the cash value, are received tax free.
No other financial instrument provides all three benefits. Understanding how tax impacts your savings account and rate of return of your assets will have a significant impact on your future wealth and ability to spend more of your own money.