The amount you will be taxed on upon the surrender of a whole life insurance policy is the difference between the cash-surrender value and your cost basis. In order to determine how much tax you will pay when you opt to take your cash-surrender value, you must first determine the total sum of premiums that you have paid into the policy over its lifetime, less any prior withdrawals. In the event that your basis is larger than the cash-surrender value of the policy, you will still receive the cash-out amount but will not be required to pay any tax on these funds.
Your insurance company can easily provide this information to you. I suggest you contact them and ask them for the necessary information to determine what your taxable amount would be upon surrender.
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