Whole life insurance offers you the following significant tax advantages¹ under current rules:

• Death benefits are generally received free of federal and state income taxes by beneficiaries.
• Death benefits may avoid estate taxation with proper planning. 
• Cash values grow income tax-deferred as long as they remain inside the policy.
• Withdrawals (equal to or less than cumulative premiums paid) are generally not taxable as long as the policy is not a Modified Endowment Contract (MEC)* Withdrawals and loans will reduce the death benefit. Withdrawals may be subject to surrender charges and could have a permanent effect on the cash value.
• Policy loans, as long as the policy is not a MEC, are generally not taxed as income until the policy lapses or is surrendered.  Upon the death of the insured, any outstanding loan plus interest is deducted from the proceeds, reducing the death benefit.

*A policy generally becomes an MEC when the amount of premiums paid into the policy exceed certain premium limits. An MEC has certain tax consequences that should be discussed with your tax advisor¹. One purpose of the tax law was to discourage using life insurance primarily as an investment vehicle.

The Power of Tax-Deferral

Although the primary reason for purchasing life insurance is protection from premature death, the benefit of tax-deferred cash value growth over time is one of the most important features of whole life insurance. The cash value of whole life insurance grows tax-deferred and is accessible through loans or withdrawals, as long as the policy remains in force.Withdrawals may be subject to surrender charges and could have a permanent effect on the cash value.  Loans reduce the cash value and death benefit by the amount of the loan outstanding plus interest.

¹ IRS Circular 230 Notice: The information concerning tax issues is not intended to (and cannot) be used by anyone to avoid IRS penalties. It is intended to support the sale of MetLife insurance products.  Neither MetLife nor its representatives or agents are permitted to give legal or tax advice. Any discussion of legal or tax issues is for general informational purposes only and does not purport to either be complete or cover every situation. Current tax law is subject to interpretation and legislative change. Tax results vary depending on facts and circumstances. You should seek tzx advice based on your particular circumstances from an independent tax advisor.