Do I need to include dividends from an insurance policy as income IF the money is used to pay the dividend and/or put in to additional paid up insurance?

No. I have several policies that I have set up like this and I have never had to claim it as income.

There might be a value limit, so I would check with a tax consultant to be certain.

Life insurance dividends are not taxable. They are treated as tax-free returns of premiums. But if you are earning interest on your dividends, the interest gain is taxable.

 

Here's more info on Life Insurance Dividends.

 

@panarl 

 

 

NOT TAXABLE - if they were you would have gotten a 1099-Div