VERY IMPORTANT:

Issues in Personal Life Insurance Planning

As a follow up to Part 1, this Bulletin highlights and provides suggestions for dealing with common income tax issues that arise in personal life insurance transactions, including: (1) policy loans, (2) the use of modified endowment contracts (?MECs?), and (3) the transfer for value rule. Recognizing the issues and understanding the applicable rules can minimize unexpected tax consequences and avoid problems, like phantom taxable income.