Tax Advisory

New Tax Rule Changes Governing Life Insurance In Force January 1, 2017

On December 31st, 2016, the Federal Government will implement tax rule changes on Life Insurance policies, the first major legislative changes affecting life insurance policies since 1982. Higher insurance costs will result, along with restrictions on the amounts that one can deposit into the investment feature within permanent life insurance such as Universal Life contracts. Policies issued prior to January 1, 2017 will be grandfathered and unaffected by these tax rule changes.

Since insurance underwriting may take 3 to 4 months we wanted to bring these tax rule changes to your immediate attention.  We have been advised by life insurance advisors that life insurance applications would have to be submitted no later than October 1st, 2016 in order for a particular permanent life insurance product to be issued in time to be grandfathered under the old tax rules.  Even then, the insurance carriers cannot guarantee that a policy would be issued in time to be grandfathered.

If you have been contemplating various life insurance options for estate planning or other wealth preservation objectives, we suggest you contact us as soon as possible to better understand the implications of these changes and how you can benefit by having your life insurance policy in force prior to January 1, 2017.