How to handle a life insurance policy surrender

[chesterspal]

I  surrendered my life insurance policy beginning of this year and took the money out. There will be a capitals gain from that action.

Do I now need to add that to my existing four quarterly payments for federal and state (CT) in 2022 to avoid a penalty or will that not be a factor?

Will I only need to pay the tax due next year?

Thank you!

[SweetieJean]

Life Insurance proceeds are taxed only on the surrender value in excess of the total premiums paid, and then as ordinary income (not capital gains).  You may be able to have (at least Federal) taxes withheld from it, so check with the insurance company.

[chesterspal]

I already have been paid the money in full.

How do I handle things, now?

I'd rather invest the money and pay the taxes and penalty next year unless there will be an issue with doing so.