Autopilot Great for Airplanes, Not So Great for Your Permanent Life Insurance Policy

Autopilot Great for Airplanes, Not So Great for Your Permanent Life Insurance Policy

Ask Bob: Can I Fund a Life Insurance Policy from My IRA?

A reader would like to fund a hybrid life insurance/long-term care policy from their IRA.
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Question

I did the one time during lifetime movement of money from my IRA into my health savings account. Could I transfer money from my regular IRA and use that money to fund a hybrid life insurance/long-term care policy?

Answer

Yes, it is possible, says John Kilroy, CPA, CFP®, partner at iValue Financial Planning, LLC, but it needs to be done very carefully.

Kilroy says, “I would recommend the reader work with a CPA and an insurance professional familiar with the process of establishing an annuity with IRA funds that could then be used to fund a hybrid policy.” He adds, “The reader should also know that, if this is done correctly, as funds leave the annuity to fund the hybrid they will be included in taxable income just like any other IRA distribution.”

Assistant editor Kim McSheridan assisted with this report.

Got questions? Get answers!

Email Robert.Powell@maven.io


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Question

I did the one time during lifetime movement of money from my IRA into my health savings account. Could I transfer money from my regular IRA and use that money to fund a hybrid life insurance/long-term care policy?

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