[Series 6] 20, Life Insurance Taxation

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and CFP designation. He is passionate about opening up information to help everyone prepare better for financial certification exams. This episode covers content for the Series 6 Exam. In this episode you will learn: - Death benefits from life insurance policies are typically received income tax-free by beneficiaries. - Cash value within a life insurance policy grows on a tax-deferred basis. - Policy loans are not considered taxable distributions for standard, non-MEC policies. - A life insurance policy becomes a Modified Endowment Contract (MEC) if it is overfunded and fails the 7-pay test. - Distributions from a MEC, including loans, are taxed on a Last-In, First-Out (LIFO) basis, with gains taxed first and subject to a potential 10% penalty if the owner is under 59.5. For more resources visit https://open-exam-prep.com/ and connect on LinkedIn at https://linkedin.com/in/chenran818