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“What it comes down to: you’ll be paying more for your life insurance policy and have less coverage,” says Steve Deacon, Principal with Deacon Wealth Management.
New income tax rules for life insurance are scheduled for January 1, 2017.
Who will this affect?
“These changes will affect permanent life insurance policies and annuities,” explains Deacon. “But, any policies issued before the changes come into effect, will be grandfathered.”
So what do these changes mean to you?
“You’ll have less ability to write off your insurance on your taxes, less insurance coverage and it’ll cost you more,” says Deacon.
“This has an even further impact on your favourite charity. Why?” asks Deacon. “Utilizing insurance is a great planned giving option for charitable giving, but under the new model, it’ll cost you more and benefit the charity less.”
“Most of us buy bacon. But have you noticed that the price has gone up AND the size of the package has shrunk? The same is happening with life insurance,” explains Deacon.
Don’t let these changes sneak up on you. Decisions and actions around coverage, benefits or riders and tax implications need to be completed before the end of the year.
Consult your advisor to find out if these changes will affect your financial situation.