If I surrender this life insurance policy and take the $40,000, are there any tax consequences?

I have a flex life policy for $100,000 that has a cash value or surrender value of $40,000.

Taxes, Life Insurance
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August 2017

Here are a few things you to think about:

Anything above your cost basis – the total premiums paid – would be taxable as ordinary income. Call the carrier and ask them to calculate the cost basis for you. It's an easy task.

Do you need a survivor benefit? Consider your need for life insurance going forward. You might not qualify for a good price further on down the road, if unfortunately your health changes. So maybe you want to hold on to the coverage.

I'm going to guess that the policy has been around for a while, and that you have been over-funding it. A cash surrender value of $40,000 is pretty good for $100,000 policy.  Ask the carrier what is the minimum monthly payment you would need to sustain the coverage. You could take out a loan for the difference.

August 2017
August 2017
August 2017
August 2017