How insurance can be used as a tax avoidance device

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Insurance policies often are a combination of a savings program and life insurance. The individual pays the company, say, $1000 a year; $100 of that goes to cover the risk of his dying during the year, and the remainder goes into a savings program. The return on the amount in the savings program accumulates free of tax-just like an IRA. Explain how insurance can be used as a tax avoidance device.

Reference no: EM131431260

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