What Is a Statutory Gift Rider?
A statutory gift rider is an add-on to a life insurance policy that allows the policyholder to give a specified amount to a beneficiary each year, separate from the policy’s death benefit. This amount is typically paid directly to the recipient and is not subject to income tax, provided the policy meets statutory requirements.
How Does the Statutory Gift Rider Work?
The rider sets an annual gift limit, often tied to federal gift tax exclusions. The policy owner can direct the carrier to pay the gift to the beneficiary without reducing the core death benefit. Payments are usually made once per year and must follow the terms outlined in the policy contract and applicable state insurance statutes.
Why Consider a Statutory Gift Rider?
This rider can simplify annual gifting from a life insurance policy while helping reduce the taxable estate. It provides a structured, tax-efficient way to transfer wealth during the policyholder’s lifetime. For more details on federal gift tax rules, visit IRS.gov.
