[USER]

I’m trying to figure out the tax implications of selling a whole life insurance policy and would appreciate any advice or insights.

When a whole life policy is sold, I understand there could be different factors at play, such as how long the policy was held, the total cash value, and any gains made from the sale.

I’m not sure how to calculate the potential tax burden, whether it would be taxed as ordinary income, capital gains, or something else.

Also, I’m curious about any differences in tax treatment if the policy is sold at a gain or loss, and if there are any specific tax benefits or considerations I should be aware of in my situation.

Has anyone gone through a similar process or can point me in the right direction to understand the tax consequences? Any tips on how to proceed would be really helpful!

[Andrew]

You most likely won’t owe any taxes when you surrender your whole life or cash value policy.

Your cash value rarely, if ever, will exceed your cost basis (total premiums paid).

There’s a reason that the interest on your cash value is “tax free”, because the IRS doesn’t care to tax you when you’ve lost money.

[John]

I want to cash out on my whole life too. Is it considered long term capital gains? At least for all investments that are longer than 1 year?

Only the last 12 months have short term?

Is this considered 1099 income?

[Blair]

Call the company & they will tell you if you have any taxes to pay & how much

[Jeff]

The ins co should know your basis. The difference between the sales price and the basis is what you will pay taxes on.

[Joël]

If you call your insurance company, they should be able to get you an answer quickly on this.

[Author]

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