We have a whole life insurance policy that has been paid into since 2009. We took small loans out and based on the advice of our insurance salesman we have not made repayments of the loans. Now with interest the loan balance has grown to $70k and our Cash value is $85k. The insurance company has told us we could surrender the policy and received the remaining cash value after the loan is paid off approximately $11K after fees. Will we be taxed on the full $85K or only on the $11K payout?
