Perhaps. If you used the dividends from the surrendered policy to purchase other insurance, it's possible you have no cost basis (after-tax dollars) left in the one surrendered. If that is the case then all of the surrendered amount will be taxable. The only way to know for sure is if you have kept track of all the money you paid for the policy over the years and the dividends that were used to purchase another policy. And, if applicable, any amount that were withdrawn for other reasons over the years would also have an affect on your cost basis.
Check with the company to see if they have a history of your transactions to help you determine if the entire amount should be taxable.
@billjans
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