Insurance settlement for unlawful Cost of Insurance

[BillEngr]

I received a small $150 insurance settlement check for a class action lawsuit that alleged an insurance company breached its Cost-of-Insurance (COI) policies because of imposed COI charges that were not based on the insurer expectations as to future mortality experience and that members of the COI Class have been damaged as a result. As such, a settlement was agreed upon to avoid the risks, costs, and delays of further litigation.

Question:  I would like to know if this amount is taxable, and if so, how it is entered into Turbotax. It sounds to me like this is pertains to excess costs levied by the life insurance company that otherwise would not have been paid. As such, it seems to me that it is not taxable. The insurance company says the settlement does not include any (1099) tax forms and none will be provided, but instead to consult a tax advisor. I would appreciate feedback on this.

[DavidD66]

It sounds like a return of premium paid due to overcharging for the cost of insurance, which would not be taxable since they just sending you some of your money back.  There's no way to know for sure without reading the settlement agreement.  Given that it's only $150 and no 1099 was issued, I would say you are fine not reporting it as income.