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Definition: Waterfall Concept
It is a life insurance plan, related to intergenerational wealth transfer, which offers a tax benefit. This concept applies when a tax deductible insurance policy is rolled over to next generation (child/grandchild). As the insurance plan has same properties as water falls which only flow downwards, the name is derived likewise.
Tax benefit is given during the time of rolling over the insurance policy to next generation. After that transfer no more Tax benefits are given. So one has to pay taxes for in withdrawal of money from the policy following normal procedure. There are variations to this concept to satisfy different objectives of the client.