Insurance Strategy: Tax-Efficient Wealth Builder Growing, using and protecting your wealth

Protecting your loved ones and your assets are important aspects of financial security and stability. With RiverSource cash value life insurance, you can help financially protect loved ones while having the opportunity to build wealth tax efficiently.


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Opportunity to build wealth and help manage long-term tax impacts

If you’re a disciplined saver looking for more opportunities to build your wealth and help manage long-term tax impacts, a cash value life insurance policy can help you accumulate assets you can use to fund future financial goals or eventually leave to loved ones. When properly structured, it can offer:

  • Greater financial security – Life insurance is an investment in your financial future by protecting your loved ones if you pass away unexpectedly. You can also pass on a legacy to loved ones or charities with the income tax-free death benefit.
  • Opportunity to build wealth – Cash value life insurance can be a tax-efficient way to build wealth for the long term, offering the potential for tax-deferred growth. It's the combination of tax benefits afforded life insurance that offers the potential for competitive asset accumulation.
  • Flexible access to withdrawals1 – With cash value life insurance, you can fund your policy and withdraw from it (through loans and surrenders) without limitations related to age and income. Funding is only limited based on the amount of coverage requested. In certain circumstances, you can access both your principal and the tax-deferred growth income tax free.

Before you purchase cash value life insurance, be sure to consider the policy’s features, benefits and fees, and whether it is appropriate for you based on your financial situation and objectives.



Deciding how you build wealth today can have a financial impact tomorrow

As you build wealth, it’s important to consider costs as well as tax implications—both can influence your long-term return. Diversifying your assets among different tax treatments (taxable, tax-deferred and tax free) can give you greater flexibility as life events, both expected and unexpected, occur.

Based on the income tax treatment of cash value life insurance, and when a policy is designed properly, it can provide:

  • Tax advantages
    • Tax-deferred growth potential
    • Potential tax-free access to cash value (through loans and withdrawals) at any age
    • Rebalance or reallocate assets without tax implications or any transaction fees
    • Income tax-free death benefit
  • A reserve for opportunities
    • Funding limit based on amount of coverage only, no annual IRS limits
    • No IRS penalties for withdrawing funds prior to age 59½ or required distributions like other qualified assets (for non-MEC policies)1
    • Access to cash value income tax free (for non-MEC policies)1


Ultimately, life insurance is intended to ease financial worries in the case of an untimely death or pass on a legacy to loved ones or charities, in the form of a death benefit. But it can do so much more. Work with your Ameriprise financial advisor to structure a policy so you can take full advantage of its potential.


Accessing policy cash value through loans and surrenders may cause a permanent reduction of policy cash values and death benefit and negate any guarantees against lapse. Surrender charges may apply to the policy and loans may be subject to interest charges. Although loans are generally not taxable, there may be tax consequences if the policy lapses, or is surrendered or exchanged with an outstanding loan. Taxable income could exceed the amount of proceeds actually available. Surrenders are generally taxable to the extent they exceed the remaining investment in the policy. If the policy is a modified endowment contract (MEC), pre-death distributions, including loans from the policy, are taxed on an income-first basis, and there may be a 10% federal income tax penalty for distributions of earnings prior to age 59½.



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Protect loved ones, manage taxes, and build wealth

Ask your Ameriprise financial advisor how you can use cash value life insurance as a strategy for tax-efficiently building wealth.

Neither RiverSource Life Insurance Company, nor RiverSource Life insurance Co. of New York, nor their affiliates or representatives, offer tax or legal advice. Consult with your tax adviser or attorney regarding your specific situation.