What Is Life Insurance Wrapper? 
The is life insurance slang that agents and registered representatives use to promote the tax advantages of a non-modified endowment contract life insurance policies to savers and investors for supplemental retirement income . The metaphor , wrapper , may be a poor one , perhaps tax favored treatment would be better . If designed correctly , these tax favored policies can generate tax free withdrawals of basis and policy loans of gain , which will not be included in the provision income test for Social Security benefit taxation . But one major proviso : these contracts must be kept in force for the life of the insured . Any termination or lapse could trigger an ordinary income tax event on the constructive receipt of policy loans and any internal policy loans used to pay annual interest due . 