Can I deduct a loss from a surrendered Variable Universal Life Policy minus the surrender charge?

[jrichardson0908]

Premiums paid in minus surrender charge equals loss.

[RichardG · Accepted solution]

This is an unclear area of tax law, but the consensus is the loss is not deductible.  This is because of the insurance feature of the policy.  Experts opine that this feature makes the policy not held for investment but for personal reasons, and the unless the cost of the insurance feature can be separated from the investment cost, no deduction is allowed.  Also, some experts view life insurance purchases as a personal expense, not an investment purchase, again, due to the insurance aspect of the policy.

Nonetheless, there is some support for the proposition that the loss is deductible under the right circumstances.  Please follow this link for more information.  https://rwalker.us/2010/03/02/if-i-surrender-a-life-insurance-policy-at-a-loss-may-i-deduct-the-loss...