Hello @Animom ,
The tax obligations associated with a withdrawal from a paid-up life insurance policy depend on several factors, including the amount of the withdrawal, the basis of the policy, and the type of policy.
If the amount you withdrew is less than the amount of premiums you have paid into the policy over the years, then the withdrawal is generally not taxable. This is because the portion of the withdrawal that represents a return of your premiums is considered a tax-free return of capital. However, if the amount you withdrew is greater than the premiums you have paid into the policy, then the excess amount may be subject to income tax.
Here are links with additional information:
https://turbotax.intuit.com/tax-tips/general/is-your-life-insurance-taxable/L0GiBZdB6
https://ttlc.intuit.com/community/retirement/discussion/life-insurance-surrender/00/517127#:~:text=F....
I hope this helps.
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