Is there tax liability involved if I cash in my life insurance policy? 2 Answers as of September 07, 2010
I am thinking about cashing in my life insurance policy for the current cash value. What kind of taxes will I have to pay? At this point I think that I have paid more in premiums than the cash value.Free Case Evaluation by a Local Lawyer!
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E. Ray Critchett, Zaino & Humphrey, LPA | Ray Critchett
If your policys cash value consists of your basis in the policy, plus any earnings, you may be taxed on those earnings. This means that if you make a withdrawal over and above your basis in the policy, a portion of the withdrawal may be considered taxable income. I would recommend consulting a tax attorney and/or your CPA prior to cashing in the policy just to ensure that you are fully aware of the potential tax consequences.
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Answer Applies to: Ohio
Replied: 9/7/2010
Law Offices of James C. Bechler, A.P.C. | James Bechler
Generally, the cash value in a life insurance policy is non taxable.
Answer Applies to: California
Replied: 8/22/2010
