A little back ground- After several families events in the last month, it has been brought to my attention by grandmother that there is a whole life insurance policy in which was opened when I was born. Because of her age and her health, she has decided to let me (as well as my parents) know that this policy exists, and asked me if I would like to continue this policy. While she is the beneficiary, she has asked if I would like to sign off to be the holder of the policy and continue to pay to keep it active, or I have the option to “cash out” the amount. I am now 30+ years old. This policy was said to have been a 25,000 policy. We are waiting on the paper work to be mailed to know all the specifics. We our own life insurance policies on myself, husband and children. So, I don’t really see the need to keep this policy active. Since this plan is already matured (while I know it probably has a low rate but also accrual) I’m anxious to what will happen or what to even expect.
Q: What should I plan to expect if I am to “cash out” this policy. Will I need to put money aside for this come next tax season or is this even considered taxable?
