If you’re consistently getting large refunds at the end of each year, you’re probably withholding too much.
Why give an interest free loan to the government every year when you could be using some of that money to purchase a life insurance policy for yourself or spouse?
If done correctly, you could see your take home pay amount stay the same while at the same time funding a life insurance policy through automatic withdrawals from your checking account.
For example, if a 37 year old male decreases his tax withholding amount by $50 per month, he could automatically set up that amount to be withdrawn from the same checking account he receives his paycheck. This step would pay the monthly premium for 30 year Term $500,000 life insurance policy and he would not even notice a difference to his monthly take home pay.
Here is the easy 5 step process:
- Figure out your new withholding on through the IRS’s withholding calculator.
- Get a new W-4 Form and fill it out.
- Submit your new W-4 to your payroll department.
- Review life insurance policy options with your agent and submit application.
- Set up life insurance premium to be paid through automatic withdrawal from checking account.
Congratulations, if you were having too much money withheld, you just gave yourself enough money to pay for a life insurance policy. Protecting you family and peace of mind sure beats waiting for that tax refund every year!