The taxable amount is referred to as a dividend by the insurance company and TurboTax looks at 1099-R as IRA/Pension payout (not insurance surrenders).
You should get a 1099R and it would be shown in the IRA/pension area:
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, 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.