![]() ![]() I recommend clients do this once a year.” For valuable items, Germer suggests working with an appraiser to give you and your insurance company an accurate estimate of their actual cash value and estimated replacement costs.ģ. “Armed with pictures,” he says, “you can jog your memory and be able to make much more complete lists. Gary Germer, an estate and personal property appraiser at Gary Germer & Associates, advises taking pictures of the inside of your home, cabinets, and closets to help with proof of loss. One of the biggest home insurance mistakes comes before you ever enter the claims process: not taking stock of your belongings. Not taking inventory of your personal property Filing insurance claims for something that isn’t covered can drive up your rates in the future and leave you high and dry.Ģ. If you’re getting tripped up by the jargon in your policy, Saini recommends speaking with your agent, who can help you review your policy and ensure you get the right coverage. Insurance policies can be confusing, but reading your policy documents is crucial. According to Angat Saini, principal lawyer and founder of Accord Law, you need to understand your entire contract, including its coverages and exclusions. He explains, “Failing to read or understand your policy’s coverage could have some serious consequences when filing a claim, and you may run into delays or other costly issues throughout the process.” In addition to taking out a policy loan, when you sell or surrender your policy and the cash value exceeds the amount you’ve contributed in premiums, the excess amount is taxable. While the scenarios above mostly pertain to beneficiaries, there are a few more situations that could leave the policyholder responsible for taxes. Likewise, any amount the policyholder borrows beyond what they’ve paid into the policy is taxable. Cash value: If the policyholder dies with an outstanding cash value loan, the policy’s death benefit could be used to settle it.Any monetary gifts above $15,000 are taxable. Gift tax: If an individual takes out an insurance policy on someone other than him/herself, the policy’s benefits are considered a gift.Installment interest: If you choose to receive policy benefits in incremental installments instead of a one-time insurance payout, you’ll be on the hook for taxes on any interest that accrues. ![]() Estate taxes: If all the policyholder’s assets meet the IRS’ federal estate tax threshold, which is set at $11.7 million in 2021, the policy’s proceeds could be taxable.The situations below are exceptions to the standard: Generally, beneficiaries don’t have to pay taxes on money received from a life insurance policy because the IRS doesn’t consider life insurance proceeds as taxable income. ![]()
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