What is the Insurance Form 712 and How Does it Work?

As an insurance advisor, I am often asked about Insurance Form 712 and its significance in the insurance industry. In this article, I will explain what Form 712 is, how it works, and why it is essential for insurance policyholders.

What is Insurance Form 712?

Insurance Form 712 is a document that is used to determine the value of a policyholder'sLife Insurancepolicy. It is also known as the Statement of Policy Values, and it includes details such as the policy's face value, cash surrender value, and loan balance. The form is typically requested by the policyholder's estate executor or administrator to determine the value of the policy forEstate Taxpurposes.

How does it work?

When a policyholder passes away, the executor or administrator of their estate will need to file an estate tax return. As part of this process, they will be required to provide information about the assets and liabilities of the deceased. Life insurance policies are considered assets of the estate and are subject to estate tax. The value of the policy, as determined by Form 712, is used to calculate the estate tax liability.

Why is it important?

Form 712 is essential because it provides an accurate valuation of the life insurance policy, which is needed to calculate the estate tax liability. Without this information, the estate may overpay or underpay taxes, which can lead to legal issues and financial consequences.

Tips for Policyholders

As a policyholder, there are a few things you can do to ensure that your estate has the necessary information to complete Form 712 accurately. First, keep your policy documents in a safe place and make sure your executor or administrator knows where to find them. Second, keep your policy up to date, including any changes in beneficiaries or coverage amounts. Finally, consider working with an experienced insurance advisor who can help you navigate the complex world of insurance and estate planning.

Conclusion

Insurance Form 712 is an important document that is used to determine the value of a policyholder's life insurance policy for estate tax purposes. As a policyholder, it is important to keep your policy documents up to date and work with an experienced insurance advisor to ensure that your estate has the necessary information to complete Form 712 accurately. By doing so, you can avoid legal issues and financial consequences and ensure that your loved ones are taken care of after you pass away.