Many people use life insurance to cover the cost of the death tax, but the strategy is failing in some estate plans now. Why? Because of low interest rates. A plan issued when rates were higher could be counted on to generate investment returns in an amount that would cover premium payments. But if interest rates decline over time, the policy may be taking out internal loans to keep up with the premium payments.
So what do you do if your plan relies on life insurance to pay taxes? Have your attorney for insurance expert do a check-up on the health of the policy.
Source for Post: Wall Street Journal Online. Click here to read the entire article.
