If
you cash in a life insurance policy you may have taxable income. The taxable
income would be -
- the cash
surrender value that you received (including any amount not received due to a loan on the policy), minus
- premiums
paid over the life of the policy. On a mutual policy, premiums are net of
participating dividends.
Generally,
this only results in income on older policies. Your insurance company should
send you a Form 1099-R for the income to report.
