Cash Surrender Value Of Life Insurance Taxable Irs. A life insurance policy loan is not taxable as income, as long as it doesn’t exceed the amount paid in premiums for the policy. If you surrender a cash value life insurance policy, the only “penalty” is that you may have to pay a surrender fee.
First, the principal, which consists of the premiums that you have paid. The interest is income and is taxed. A life insurance policy loan is not taxable as income, as long as it doesn’t exceed the amount paid in premiums for the policy.
Surrender Life Insurance Policy For Cash Value Taxable
The court held that the taxpayer did not have a loss, because it did not have a basis equal to the full amount of the premiums paid: Say you’ve paid $8,000 in premiums annually over the 15 years you’ve owned your policy — a total of $120,000 over that time — allowing your policy’s cash value to grow to. This amount can vary according to a variety of factors. The profit is taxable, just as most profit would be taxable.
