How to Get Free Life Insurance: Make More Money

Have you ever wondered how to get free life insurance? I’m not talking about getting free life insurance from work. It’s often not enough. I’m talking about how to get free insurance outside of work.

My wife and I have life insurance because we have two young children, financial difficulties, and a mortgage. Having life insurance will buy time for our survivors to make arrangements after one or all of us pass.

Because we have more assets than liabilities, we can be technically insured (not underinsured). However, the value of our life insurance policy is more important than the stated death benefit.

Updating our life insurance policies and creating death files has reduced our stress as parents. Please join if you haven’t already.

If you’re still dragging your feet, let me go through some ideas on how to get life insurance for free. The idea may make you hate your income taxes. In addition, it can encourage you to make more money to take care of your family.

Life Insurance Benefits Are Usually Tax Free

To first understand how to get free life insurance you must first understand the tax on the death benefit. Life insurance premiums are tax-deductible. As long as the money is paid in full as a one-time payment, in full, no tax is owed.

You can also choose to have your beneficiaries receive your life insurance payments in installments. In such cases, the borrower will pay interest on the outstanding amount. This means that the beneficiary must pay tax on the interest.

But in most cases, life insurance premiums are paid in one lump sum. Therefore, the beneficiaries do not have to have a taxable interest.

The higher your average tax rate, the more expensive your life insurance policy will be. In other words, the more you earn, the more likely you are to get free life insurance.

Estate Tax Considerations For Life Insurance

Property taxes are another type of tax that you need to consider. After your death, your executor will need to file IRS Form 712 as part of your estate tax return. Form 712 tells you the cost of your life insurance based on when you died.

If your spouse is the beneficiary, life insurance premiums are not paid. It will be given to them in full, along with all your wealth that is left to them. Married couples have the right to not pay estate tax.

If your beneficiary is someone other than your spouse, such as a child or parent, your life insurance premium will be added to the value of your estate.

As long as the total value of your property is less Being exempt from federal and state taxes, your property does not have to pay any taxes. However, any outstanding amounts will be subject to estate and inheritance tax.

Recently Tax Estate Threshold

  • Federal Estate Taxes – The value of your estate that exceeds $12.06 million per person will be taxed at 40% in 2022.
  • State Estate & Inheritance Taxes – There are 18 states, including DC, with an inheritance or estate tax. The amount of the estate tax varies by state, but is usually between $1 million and $2 million. Taxes can be as high as 20% depending on where you live.

In other words, as long as your estate is at least $12.06 million per person when you die, you will not have to pay estate tax. However, be aware of your state’s estate and inheritance tax policies.

How Life Insurance Matters

Always calculate how much money you have to earn to pay for the item. Once you start thinking like this, you will be more careful with your spending.

When it comes to determining the amount of life insurance, you need to think the same way. How much do you need to earn before paying taxes to pay the death benefit?

Let’s say you get a 30-year, $1 million policy at $50 a month when you’re 30. 30 out of 30 years is a good age and life insurance term in my opinion. Your property is also under the property tax threshold.

Here’s the cost of your $1 million long-term insurance policy based on your employment tax.

  • If you pay a flat rate of 0%, then the cost of your $1 million insurance policy is $1 million.
  • If you pay a flat tax of 10%, then the cost of your $1 million life insurance policy is $1.111 million.
  • If you pay a flat tax of 12%, then the cost of your insurance for $1 million is $1.136 million.
  • If you pay a flat tax of 15%, then the cost of your insurance for $1 million is $1.176 million.
  • If you pay a flat tax of 18%, then the cost of your insurance for $1 million is $1.219 million.
  • If you pay a total tax of 20%, then the cost of your insurance for $1 million is $1.250 million.
  • If you pay a total tax of 23%, then the cost of your insurance for $1 million is $1.298 million.
  • If you pay the full 25% tax, then the cost of your insurance for $1 million is $1.333 million.
  • If you pay a total tax of 28%, then the cost of your insurance for $1 million is $1.389 million.
  • If you pay a maximum tax of 30%, which is the average tax rate, then the value of your life insurance for $1 million is $1.428 million.
  • If you pay a maximum tax of 35%, then the cost of your insurance for $1 million is $1.538 million.
  • If you pay a maximum tax of 40%, then the cost of your insurance for $1 million is $1.666 million.
  • If you pay a maximum tax of 45%, then the cost of your insurance for $1 million is $1.818 million.
  • If you pay a tax of 50%, then the cost of your insurance of $ 1 million is $ 2.000 million.

In other words, if you pay a maximum tax of 30%, you need to earn $1.428 million to spend $1 million to give to your beneficiaries. Therefore, life insurance becomes more important when you earn more.

How To Get Free Life Insurance

Life insurance benefits increase our effective tax rate. Now let’s figure out how to get life insurance for free. Your goal is to get free life insurance and living beyond the term of life insurance.

Take the difference between the total amount you need to make to pay the death benefit and the death benefit. Now compare the difference with the amount you pay for your life insurance.

For example, let’s say you pay a 20% tax rate and have a $1 million term policy. To provide a death benefit of $1 million if you have no insurance means you need to make $1.25 million. Take the $1.25 million net worth minus the $1 million death benefit = $250,000. $250,000 is the amount of tax you had to pay.

Now take the $250,000 in taxes you paid and subtract it from the life insurance premium you would pay over the life of the policy. If the difference is greater than 0, then you were able to get life insurance for free.

If you get a 30-year, $1 million policy over 30 years, you’ll pay between $500 – $1,000 a year, depending on your health. If you multiply $500 – $1,000 by 30, the life of the policy, you get $15,000 – $30,000. You can do the same math with shorter points.

$15,000 – $30,000 is less than $250,000 in taxes. Therefore, the cost of having life insurance is free if you die within that period. Instead, you end up making an amount equal to the death benefit minus the annuity paid. But we already know this.

Of course, if you can outlive your life insurance, as many people do, then you lose $15,000 – $30,000 from your life insurance premiums. But that’s not a big price to pay to protect your family for 30 years. It’s a lot of fun, especially because you get to live!

HENRYs Are the Numbers for Life Insurance Prospects

HENRY means “High Earner, Not Yet Rich.” The average HENRY can earn a high income in their lifetime of $200,000 – $800,000. However, they may have a lot of anxiety because their net is not enough.

Although HENRY earns a lot of money, he often works long hours and is tired. When HENRY reaches the age of 40, he may begin to question the purpose of grinding too much. Paying high taxes when you are tired is not fun.

With young children and elderly parents to care for, HENRY is in a good position to get life insurance. Most HENRY’s I know pay a flat 20% tax. They work in expensive cities with high taxes.

Therefore, the cost of their life insurance often at least 20% adult more than the death benefit. This means that the life insurance will be free if he dies before the end of the period. Therefore, it would be foolish not to have life insurance now.

Between the ages of 30 and 60 is when life is most difficult, and can be very dangerous. Generally, we cannot withdraw from our 401(k)s and IRAs before age 59.5. Furthermore, the earliest you can take Social Security is age 62. Having a high-value insurance policy to see you through your critical years is a smart move.

Does the Richest Earner Still Need Help?

Let’s say you have $11 million in cash. In addition, your asset to debt ratio is at least 10:1. You are also earning more. Do you still need life insurance?

Maybe not. If your property is generating enough income to cover your family’s expenses, it can often continue, unaffected. Worse, the executor of your trust may sell assets to pay off your estate’s debts.

Even if you have a lot of money and a lot of money, life insurance is a good thing to have. First, you are getting the benefit of the death insurance you are paying for. Paying higher average taxes is the reason. But most importantly, you have extra money to pay the bereavement.

Sometimes we make rash decisions in times of crisis. And the mourning may take months, or years, to end. Life insurance benefits can help keep things going smoothly during this time.

Coverage Is Right For My Family

For me, life insurance is worth at least 1.5X its actual death benefit. In other words, a $1 million term policy is worth $1.5 million to my family or more. Therefore, I plan to have life insurance until my children graduate from college. By then, my mortgage will be paid off.

Life insurance reduces disruption in an already disrupted life. If you’re looking for competitive insurance all in one place, check out PolicyGenius. My wife was recently able to increase her life insurance coverage for less with PolicyGenius. And together, we feel relief because now we have the same number of coverage.

Readers, have you realized that life insurance is very important when you make it? What are the holes in my plan to get tax free insurance? What do you think about HENRY being the people who want to get life insurance?