There are different types of interest associated with a life insurance policy and they are treated differently for tax purposes.
"Interest" earned inside a cash value policy such as a Universal Life policy is not taxed while it is inside the plan. There are limits to the cash value to death benefit ratio to keep it tax exempt from accrual taxation.
"Interest" earned on dividends held on deposits with a participating policy such as a Whole Life policy is taxed as interest income as earned.
"Interest" earned on a death benefit before it is disbursed is taxable as interest income.
If you have further questions, or feel that I could be of assistance, please do not hesitate to contact me.
If you would like to work with a local life insurance broker, you could start with a Google search. For example, if you search for: life insurance broker Halifax or life insurance agent Halifax, my name, along with several others, will come up. You can use the same method to find a life insurance broker in your community.
Insurance Adviser - Broker, SC Insurance Services, Oahu, Hawaii
Life insurance plans are one of the most protected pieces of property a person can own. One of the protections is that gains via interest and dividends , (if in a participating, usually mutual company, plan), are NOT taxable as long as they are in the policy. You may also have use of the cash value including the gains without being taxed as long as it is accessed via policy loans. It's a beautiful thing!
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"Interest" earned inside a cash value policy such as a Universal Life policy is not taxed while it is inside the plan. There are limits to the cash value to death benefit ratio to keep it tax exempt from accrual taxation.
"Interest" earned on dividends held on deposits with a participating policy such as a Whole Life policy is taxed as interest income as earned.
"Interest" earned on a death benefit before it is disbursed is taxable as interest income.
If you have further questions, or feel that I could be of assistance, please do not hesitate to contact me.
If you would like to work with a local life insurance broker, you could start with a Google search. For example, if you search for: life insurance broker Halifax or life insurance agent Halifax, my name, along with several others, will come up. You can use the same method to find a life insurance broker in your community.