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Tax-Free Savings Inside a Life Insurance Policy: Rethinking Conventional Wisdom


Cost Free
Presentation Length 1.0 hour

Recorded DateNovember 11, 2021
CPE:Not available
(archived webinars do not offer CPE credits)
Subject AreaTaxes
Course LevelBasic
Course Description

Life insurance enjoys similar income tax attributes as Roth IRAs. Structured properly, premiums are paid into the policy after tax, earnings in the cash value and distributions therefrom (withdrawals and policy loans) are not included in the policy owner’s gross income, and death benefit proceeds are generally not included in the beneficiary’s gross income. Many high-income-earner and high-net-worth taxpayers cannot qualify for Roth IRAs, may be limited with how much they can contribute to a Roth 401(k), or may soon be forced to take required minimum distributions from “mega IRAs” and “mega Roth IRAs” (such as what was included in the House Ways and Means Committee proposed tax increases released on 9/13/2021).  For these taxpayers, cash value life insurance can provide powerful, Roth-like income tax benefits to build and preserve wealth. This session will examine how cash value life insurance can act as an “unlimited Roth alternative” for these affluent taxpayers to provide valuable death benefit protection and grow wealth tax-efficiently to access during life. We’ll also include a detailed analysis of the effect of policy changes on cash value accumulation compared to the taxes on a traditional investment portfolio.  

Is the conventional wisdom about cash value life insurance in this regard right or wrong?  This presentation will help answer this question, with the underlying math to support it.
Learning Objectives:

  • Recall the inner workings of cash value life insurance including its tax attributes and economics

  • Identify how cash value life insurance can be positioned as an alternative to a Roth for high-income-earning clients

  • Recognize how cash value life insurance can compare to, and complement, a traditional investment portfolio

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Michael Fontanini, MT, CFP, CLU

Lion Street
VP, Advanced Sales And Design
(512) 776-8453

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Michael Fontanini, MT, CFP, CLU is Vice President, Advanced Planning and Design with Lion Street, Inc., a national network of fiercely independent life insurance and wealth management advisors. Michael specializes in developing sophisticated life insurance solutions to meet the sophisticated needs of high net worth and business owner clients of the 190 Lion Street firms nationwide and manages a team of four advanced case design consultants. Prior to Lion Street, his background consisted of diverse experience with several life insurance companies in the areas of personal financial planning, life insurance product development and advanced markets.

Michael has earned a Master of Taxation (MT) Degree and Estate Planning Certificate through the Graduate Tax Program of Villanova University Charles Widger School of Law and Villanova School of Business, as well as the designations of Certified Financial Planner (CFP) and Chartered Life Underwriter (CLU). He is FINRA series 7 and 26 registered, a current member of the Wealth Transfer Committee and Estate Tax Working Group committee for the Association for Advanced Life Underwriting (AALU) and a former member of the Advanced Sales Committee for LIMRA.

About Our Presenter

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Lion Street is a leading national financial services company comprised of over 200 independent owner-firms that specialize in design and planning for high net worth and corporate clients. Each owner-firm is carefully selected, held to the highest ethical standards, and approved by an executive committee. The term “Owner” is used, as each advisor is a stockholder in Lion Street, similar to being a partner in a law or tax firm. This model supports “Fierce Independence” compared to being an employee, broker, or member of an organization. Ownership in Lion Street is by invitation only; they have no members.