Cashing out universal life insurance

[HKB]

I am thinking to cash out my universal life insurance policy, but am trying to figure out tax implications first.   The cash value of the policy is less than the premiums that were paid into the policy.   So, the loss on the policy is around $3900.   My understanding is that I won't owe taxes on this because the premiums I paid over the life of the policy were more than the cash value of the policy.  Am I correct in my thinking?  I realize this policy is still paying dividends, but the money paid in exceeds the cash value of the policy.  

[MinhT1 · Accepted solution]

Yes, you are correct.

If the cash surrender value of your life policy is less than the total premiums you paid, there's no tax due when you cash out, as there is no investment gain.

Please read this TurboTax Help article for more information.

[HKB]

Thank you for your response.  I appreciate it!