Posted By:
Frank WakefieldWarsawlaw has omitted mentioning inheritance tax.
I am certain that you won't have tax problems any way whatsoever, when you die, if you've scheduled cards with an insurance company. You'll be dead. No taxes for you.
Your beneficiaries will face a different story.
If you buy that card that's listed in Leon's new contest for 30k, and you insure it... 12 years later you have it insured for 65k, and you sell it for 65k and quit insuring it. Now you have 35k of ordinary income. If you don't pay tax on it, that can be seen after you die.... You had it valued at 65k and insured in 2019, then not scheduled after that... must have been sold. Taxes on the 35k plus penalties and interest. Or you didn't sell it, it's still in the estate, you've paid decades of premiums, and it affects the value of your estate (possible estate taxes, but not likely, warsawlaw has that right), AND inheritance tax on whoever gets it. It would be like winning a 40k sports car on Wheel of Fortune, you win, they want you to pay 12k income tax on it, so you can't come up with it, leaving you to sell the car for only 35k and pay the 12k and pocket 23k. Here, kid, your granddad left you a 65k Cracker Jack card, have you enough money to pay the inheritance tax, or do we sell the card and give you what's left.
Really need to think long and hard before you start giving an insurance company premium money. The safe and safety deposit box guys have it right.