Tax Law Change Impacts Life Insurance 2021

Are you on the hunt for a solid life insurance plan? 2021 life insurance is ever-changing and has even more due to recent events. If you’re in the market for life insurance or have a life insurance plan already, it’s imperative to stay updated on life insurance facts in current times. 

Researching what to know about life insurance 2021 is a key component to protecting your current financials and the financial future of your loved ones. The Nowell Agency has committed our entire career, since 1984, to developing a full range of life insurance plans to fit every circumstance and need and staying abreast of current life insurance trends, knowing what changes to watch in the industry, and paying attention to laws that affect life insurance.

All About Life Insurance 2021

The things to know about life insurance 2021 mainly revolve around the Consolidated Appropriations Act 2021. You’re probably wondering why the year-end omnibus spending and coronavirus relief bill is crucial in a discussion about life insurance in 2021. Great point! The reason the CAA 2021 is connected to life insurance is that there is a small tax law change embedded in this bill which affects how interest rates on life insurance policies qualify under the tax code. Specifically, this bill affects how tax-advantaged, permanent life insurance policies 2021 are defined. 

Changes in Life Insurance 2021

So what will new tax changes for life insurance look like? The tax change for permanent life insurance, section 7702 that’s integrated in the federal bill means that there will be some changes for you if you have or are planning to have permanent life insurance. 

To better understand these changes, let’s travel back in time a bit. It’s 1984 and Tetris has hit the game world, Prince’s Purple Rain is reigning supreme, Footloose wows movie-goers, the Discovery makes its maiden voyage, and The Nowell Agency is formed. In the tax world, interest rates are at a high, much higher than today. The credit interest rate for permanent life insurance policies is set at 4% on the cash value, in order for the policies to maintain coverage until death.

Fast forward to today, when Covid-19 brings extremely difficult economic conditions and interest rates are low. The fear grows that the funding for life insurance will dwindle to nothing. Insuring companies are seeing the likelihood looming: rates of return from permanent life insurance policies that support life insurance contract payouts will be gone, as individuals will not be able to purchase these policies due to financial constraints. The solution? The new 7702 law drops the key interest rate to 2% for new life insurance policies in 2021. Future rates will be variable, assessed at preset benchmarks. 

Life Insurance What to Know

What does the new law mean for life insurance policyholders? The benefit to you is greater financial security through an increase in the amounts you can contribute to cash-value life insurance accounts; cash value that you can access as needed. Take advantage of this benefit now and get a new permanent life insurance plan.

The Nowell Agency specializes in permanent life insurance policies. As one of the best life insurance companies in Mississippi, we are here to help you find the right plan for your specific needs. We offer a vast array of life insurance designed to protect your financial future, including guaranteed acceptance life insurance, key man life insurance, guaranteed income for life, and so many more. Our over three decades of experience means we’ll help you find the right coverage for the right price. Contact The Nowell Agency today and learn how our life insurance protects you!