You can specify that your beneficiary get a periodic payment of the interest on the death benefit’s cash value. Because the beneficiary earns interest on the account, he or she must claim the benefit as taxable income. An interest-only payment option is a means of budgeting the funds while maintaining the investment. Beneficiaries usually have the option of withdrawing the principal (although generally not all at once), which defeats the purpose of this payment option. Or they can borrow against the principal by using it as collateral and get a better rate than they can get from a bank loan. Usually, the life insurance contract specifies a minimum interest rate.
No comments:
Post a Comment