Selling a whole life policy

Q: I heard that you can sell a whole life policy to a third party for more than the policy’s cash value. But after some research, I found that third parties typically pay at most 25% of the face value of the policy. Could you explain this?

A: Selling a life insurance policy to a third party is typically a viatical settlement. This happens when someone has a terminal illness and sells their life insurance policy to pay for their care, says Jonathan Howard, a financial planner in Lexington, Kentucky. The sales price is likely to be more than the cash value of the policy but less than the face value, or what a beneficiary would receive from the death benefit.

“How much the sale price differs from the cash value will vary depending on the age of the policy, how much in premiums have been paid into the policy, and whether the owner has made any withdrawals or loans from the cash value,” Howard says.

Q: I made a mistake on my tax return. Should I file an amended return?

A: Not necessarily, says the IRS. Mathematical errors, for example, don’t require an amended return because the agency will correct the mistakes and notify you in writing of any changes, though you should have your tax preparer review them for accuracy.

You should also hold off filing an amended return if you believe the American Rescue Plan Act, which Congress passed earlier this year, affects you. The IRS is still reviewing those provisions before issuing guidance to taxpayers. For other changes, use the IRS’s Interactive Tax Assistant tool ( to determine if an amended return is needed.

Q. I understand that the IRS will pay part of the new child tax credit in advance. How will that work?

A. The advance payments will account for half of a family’s 2021 child tax credit. The IRS will issue these monthly child credit payments to eligible families on July 15, Aug. 13, Sept. 15, Oct. 15, Nov. 15 and Dec. 15.

Most payments will be directly deposited into bank accounts. Families for which the IRS does not have bank account information could receive paper checks or debit cards in the mail.

The amount a family receives each month will vary based on the number of children, their ages and the family’s modified adjusted gross income. Families who qualify for the full $3,000 or $3,600 credit will see checks of $250 or $300 per child for six months. Families with higher incomes who qualify for the $2,000 credit will get monthly payments of $167 per child for six months.