Insurance patent
This patent application describes a method for increasing the ease of changing insurance companies. Certain insurance products and practices have been described as rent-seeking by critics. That is, some insurance products or practices are useful primarily because of legal benefits, such as reducing taxes, as opposed to providing protection against risks of adverse events. Under United States tax law, for example, most owners of variable annuities and variable life insurance can invest their premium payments in the stock market and defer or eliminate paying any taxes on their investments until withdrawals are made.
Sometimes this tax deferral is the only reason people use these products. Jewish rabbinical scholars also have expressed reservations regarding insurance as an avoidance of God's will but most find it acceptable in moderation. Muslim scholars have varying opinions about life insurance. Life insurance policies that earn interest are generally considered to be a form of riba and some consider even policies that do not earn interest to be a form of gharar. Some argue that gharar is not present due to the actuarial science behind the underwriting. United States, Premiums paid by the policy owner are normally not deductible for federal and state income tax purposes, and proceeds paid by the insurer upon the death of the insured are not included in gross income for federal and state income tax purposes. As always, both the United States Congress and state legislatures can change the tax laws at any time.
Group life insurance
Group life insurance often allows members exiting the group to maintain their coverage by buying individual coverage. Group life insurance is term insurance covering a group of people, usually employees of a company. The underwriting is carried out for the whole group instead of individuals. Members of a union or association, or members of a pension or superannuation fund. Individual proof of insurability is not normally a consideration in its underwriting. Rather, the underwriter considers the size, turnover, and financial strength of the group. Contract provisions will attempt to exclude the possibility of adverse selection.
Permanent life insurance
The owner can access the money in the cash value by withdrawing money, borrowing the cash value, or surrendering the policy and receiving the surrender value. Permanent life insurance is life insurance that covers the remaining lifetime of the insured. The three basic types of permanent insurance are whole life, universal life, and endowment. A permanent insurance policy accumulates a cash value up to its date of maturation. For this reason, insurance policies can be a legal and legitimate tax shelter wherein savings can increase without taxation until the owner withdraws the money from the policy. In flexible-premium policies.
Whole life insurance
Whole life insurance provides lifetime coverage for a set premium amount see main article for a full explanation of the many variations and options. Large deposits of premium could cause the contract to be considered a modified endowment contract by the Internal Revenue Service, which negates many of the tax advantages associated with life insurance. Cash value increases within the policy are not subject to income taxes unless certain events occur. However, if the proceeds are included in the "estate" of the deceased, it is likely they will be subject to federal and state estate and inheritance tax.
Universal life coverage
Universal life insurance policies have cash values. Paid-in premiums increase their cash values; administrative and other costs reduce their cash values. The insurance company, in most cases, will inform the policy owner of this danger before deciding their premium. The tax ramifications of life insurance are complex. The policy owner would be well advised to carefully consider them. There are several types of universal life insurance policies, including interest-sensitive also known as “traditional fixed universal life insurance”, variable universal life guaranteed death benefit, and has equity-indexed universal life insurance. Universal life insurance is a relatively new insurance product, intended to combine permanent insurance coverage with greater flexibility in premium.
