Are there any financial consequences for cashing out on a whole life insurance t

Are there any financial consequences for cashing out on a whole life insurance that%26#039;s been active for 25 years

Best Answer - Chosen by Voters

In the US, a taxable gain (anything you get back beyond what you paid in) is considered ordinary income. You will get a 1099 for that amount. When you talk to the customer service folks, you should just ask them what the taxable gain is on the policy. This is a common question they should be able to answer easily.

Come tax time, you may want to seek the help of an accountant because some companies send a 1099 for the full amount, not just the gain. Experience guiding over 600 agents and my own practice. 67% 2 Votes

Other Answers (5)

There shouldn%26#039;t be any financial consequences. Are you planning to take a loan out or cancel the policy in its entirety?

Two things can happen: you can take out a loan on the cash value, and pay the company back over the course of the policy. Or, you can take out a withdrawl, leaving no loans to pay back. However, if you take out a withdrawl or loan, you may have to start paying more towards the premiums, if you want to continue the policy. In insurance for 10 years now. 0% 0 Votes
You might have a taxable gain on the cash reserve.

You should check the policy for surrender fees before you make up your mind.

In Canada there is special tax treatment for life insurance policies from 1982 or earlier.

I suggest you call the agent or broker of record (whoever is listed on your policy as your agent or broker) to discuss the implications of cashing out. Or you could call the insurer directly. 0% 0 Votes
You mean, besides not having life insurance any more?

It%26#039;s not usually a taxable event, because you%26#039;ve paid in more than you get, when you cash out. agent, 21+ years 33% 1 Vote
read the fine print there could be some penalties 0% 0 Votes

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