Good morning,
Sorry it took so long to get back to you but the insurance company was giving me mixed messages.
I called CNA and spoke to a representative who was going to send a 1099 form. After about two weeks of waiting I called the Company again because I did not get the 1099. This time I got a different person who gave me a different answer. The representative said that since I opened the policy after 1997 (I opened the policy in 1998) it was Tax Qualified and that no 1099 is required. The representative could not help me with what that means relative to my situation and suggested I find a tax consultant.
I did a search on the web and initially got confused with the language but I think now I have some understanding of the situation. To the best of my knowledge, since I did not deduct my LTC policy premiums on my income taxes over the years, the payment for the surrender of the Long-Term policy is not taxable.
Assuming some part of the surrender value is taxable, how/where do I put the sum given for the surrender value and where/how do I put the premiums (cost basis). The policy itself only addresses surrender value when benefits are being received.
Please share your understanding of this situation and whether the lump sum Tax Qualified payment is taxable or not.
Thank you so much for your time and help on this tax question.
