Is Interest Earned on a Life Insurance Policy Taxable?
Introduction
Life insurance serves as a crucial financial safety net for families, providing a payout to beneficiaries upon the policyholder's demise. Apart from this death benefit, many life insurance policies also accumulate cash value over time. This cash value often earns interest, but does this interest income come with tax implications? In this comprehensive guide, we will explore whether the interest earned on a life insurance policy is taxable and shed light on the nuances of this financial matter.
1. Understanding Life Insurance Basics
Types of Life Insurance: A brief overview of the two primary types of life insurance - term life and permanent life insurance.
Cash Value in Permanent Life Insurance: Explaining the concept of cash value and how it accumulates in perma...