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Old 06-20-2018, 04:24 AM   #1
Davis65
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Default Regarding Insurance Claim!!!

One of my friends was recently diagnosed with terminal cancer. His employer's life insurance provides for a one time 50% withdrawal in cases of terminal illness. My question is, does he have to pay taxes on this and can my creditors take this money from me?
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Old 06-20-2018, 06:08 PM   #2
AFFA
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Default Re: Regarding Insurance Claim!!!

I wish to inform you that insurance amount is in the form of reimbursement of medical expenses or for payment of medical expenses. Hence insurance amount of your friend may not be subject to taxes because it is part of reimbursement. Further creditors may not claim such an amount as the said amount is paid towards meeting expenses of illness. However if the amount is lying in bank account and the said bank account is having garnishing orders then your friend may be required to obtain temporary injunction from garnishment of amount received to meet medical expenses.

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Old 06-21-2018, 11:05 AM   #3
adjusterjack
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Default Re: Regarding Insurance Claim!!!

Quote:
Originally Posted by Davis65 View Post
One of my friends was recently diagnosed with terminal cancer. His employer's life insurance provides for a one time 50% withdrawal in cases of terminal illness. My question is, does he have to pay taxes on this and can my creditors take this money from me?
Employer provided life insurance is generally term insurance which does not have a cash accumulation.

I suggest you have your friend come here with his insurance paperwork in front of him so we don't get secondhand misinformation. Or, he can talk to a tax pro.

Meantime, ignore the other response.
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Old 06-21-2018, 02:43 PM   #4
LJJ
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Default Re: Regarding Insurance Claim!!!

Many life insurance policies offer “accelerated death benefits,” which allow policyholders who have been diagnosed with a terminal illness to access a portion of the policy’s death benefit while they are still alive. These benefits may be available for both term life insurance policies, which last for a certain number of years but have no cash value, and permanent life insurance policies (such as whole life), which remain in force for as long as you pay the premiums and build cash value that you can withdraw or borrow against.

Often it is not taxable. An expert has to review the policy and state tax law.

His creditors could try to take it, but many states have exemption statutes that protect such funds.
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Old 07-02-2018, 08:40 AM   #5
Lexus
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Default Re: Regarding Insurance Claim!!!

Normally those funds are exempted and tax free. Further, your creditors could to take that money from you as you are only the custodian.
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Old 07-02-2018, 07:11 PM   #6
Highwayman
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Default Re: Regarding Insurance Claim!!!

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My question is, does he have to pay taxes on this and can my creditors take this money from me?
What do YOU have to do with it that any creditor would take YOUR money???
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Old 07-04-2018, 11:22 AM   #7
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Default Re: Regarding Insurance Claim!!!

Maybe the questioner is a/the beneficiary of the insurance policy.

That's what it sounds like to me.
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