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Old 10-08-2011, 09:23 AM
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accelerated life benefit help

I'm in Georgia, 61 y/o, had a heart attack. Insurance is offering an accelerated benefit settlement. Can I be taxed on this money and if so at what rate. Thanks, Elliott



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Old 10-08-2011, 10:00 AM
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Life benefits help

BTW...I have paid all premiums myself...Elliott



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Old 10-08-2011, 07:42 PM
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“Insurance is offering an accelerated benefit settlement. Can I be taxed on this money and if so at what rate?”---->IT depends on your situation; the accelerated death benefit proceeds received by the terminally ill are generally tax free so you do not report them on your tax return. However, if the policy is sold to a viatical settlement(the sale of a life insurance policy by the policy owner before the policy matures. Such a sale, at a price discounted from the face amount of the policy but usually in excess of the premiums paid or current cash surrender value, provides the seller an immediate cash settlement.), company or the accelerated death benefits are paid by an insurance company under a long term care rider, and the accelerated death benefits are used to pay for long term care, and the proceeds exceed the IRS per diem limit and the actual costs of long term care, the excess is taxable on your tax return.So, both, accelerated death benefit and viatical settlement are tax free. But if the benefits are used for a long term care, then the excess mount is taxable and should be shown when filing your tax returns. This is applicable if and only if it exceeds IRS per diem limit. So make sure that you show the proper amount when filing the tax forms. Make sure that you get the tax reduction by placing the accelerated death benefit or viatical settlement below the limit mentioned by them



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Old 10-08-2011, 11:36 PM
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accelerated benefits

Quote:
Originally Posted by Wnhough View Post
“Insurance is offering an accelerated benefit settlement. Can I be taxed on this money and if so at what rate?”---->IT depends on your situation; the accelerated death benefit proceeds received by the terminally ill are generally tax free so you do not report them on your tax return. However, if the policy is sold to a viatical settlement(the sale of a life insurance policy by the policy owner before the policy matures. Such a sale, at a price discounted from the face amount of the policy but usually in excess of the premiums paid or current cash surrender value, provides the seller an immediate cash settlement.), company or the accelerated death benefits are paid by an insurance company under a long term care rider, and the accelerated death benefits are used to pay for long term care, and the proceeds exceed the IRS per diem limit and the actual costs of long term care, the excess is taxable on your tax return.So, both, accelerated death benefit and viatical settlement are tax free. But if the benefits are used for a long term care, then the excess mount is taxable and should be shown when filing your tax returns. This is applicable if and only if it exceeds IRS per diem limit. So make sure that you show the proper amount when filing the tax forms. Make sure that you get the tax reduction by placing the accelerated death benefit or viatical settlement below the limit mentioned by them
First I'd like to thank you for your time and expertise...not sure I'm totally clear though...the insurance policy has a rider in case of a life event. can be a heart attack (dependant on the seriousness) and other serious events. the company has determined my heart attack as serious and is offering what they call an "accelerated benefits for critical illness". they are offering two options one is for an amount of money after which my policy is then worth 50% of it's original value and the second offer basically twice as much and if chosen will surrender all the value of the policy. I assume because the HA was serious they judge it to shorten my life expectancy. there was no specific use designated for use of the settlement. They say it may meet the IRS criteria of code: section 7702B(b) of the IRS 1986. would this set of circumstances be non-taxable. Thanks Again Wnhough, Elliott



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Old 10-09-2011, 01:48 AM
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“They say it may meet the IRS criteria of code: section 7702B(b) of the IRS 1986. would this set of circumstances be non-taxable.”------>It is NON taxable .Since you do qualify for these benefits, the money may be used for just about any purpose and may even be tax-free. Accelerated death benefits are monies paid to the terminally ill(under HIPAA, one who has a life expectancy of 24 months or less) for surrendering their policies to their life insurance companies. Accelerated benefits are the proceeds of life insurance policies that are paid by the insurer to policy holders before they die. Occasionally, these benefits are included in policies when they are sold, but usually, they are offered as riders or attachments to new or existing policies.



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Old 10-09-2011, 08:02 AM
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accelerated benefits

Quote:
Originally Posted by Wnhough View Post
“They say it may meet the IRS criteria of code: section 7702B(b) of the IRS 1986. would this set of circumstances be non-taxable.”------>It is NON taxable .Since you do qualify for these benefits, the money may be used for just about any purpose and may even be tax-free. Accelerated death benefits are monies paid to the terminally ill(under HIPAA, one who has a life expectancy of 24 months or less) for surrendering their policies to their life insurance companies. Accelerated benefits are the proceeds of life insurance policies that are paid by the insurer to policy holders before they die. Occasionally, these benefits are included in policies when they are sold, but usually, they are offered as riders or attachments to new or existing policies.
Wnhough...YOU ARE SO VERY KIND....to take your valuable time to help out total stranger is wonderful...a very noble action...thanks again, Elliott



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Old 10-09-2011, 09:30 AM
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Thanks for your compliment.Good luck to you~~



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