Life insurance canceled with no gain do I have tp report it as income?

[GeoffreyG]

When cashing out or cancelling a life insurance policy, there is typically no taxable gain on the transaction (which would occur only if the insurance company paid you back in an amount that was greater that the sum total of your past premiums, which is rather unlikely).  Hence, there is no tax event that you would need to report as income, or elsewhere on your tax return.  Similarly, any losses (which are far more common) on the redemption or cancellation of a life insurance policy are not reportable either.

Another way to tell if your transaction is taxable or reportable, is if the life insurance company sends you a Form 1099-INT, 1099-DIV, or 1099-R . . . or not.  If they do, then it may be; if they don't, then it almost certainly is not.

Thank you for asking this important question.