insurance buyout

[larry967]

i have a long term care policy - the co is offering to buyout my policy - they will refund the premiums I have paid with no interest (i get my money back) this is a "qualified ins plan" all paid with after tax money.

Will I owe any tax on the refund? 

[ReginaM · Accepted solution]

No, you will not owe taxes on the company's buyout of your policy since you paid the premiums with after tax dollars.  The benefits of tax-qualified long term care insurance policies are generally received tax-free by the policyholder.  Tax-qualified long term care insurance policies are treated the same way qualified health insurance is treated.