What Happens When Life Insurance Policy Matures?
0 POINTSContact Meview profileDavid RacichPROFountain Hills, ArizonaAssuming that the question is referring to when a permanent life insurance policy matures, it depends on the type of life insurance and the policy owner activity that preceded the maturity date. But in general terms, at maturity, all policy gains are characterized as ordinary income and taxed accordingly. Any outstanding policy loans received by the policy owner are characterized as ordinary income and taxed accordingly. Any internal loans cause by the cannibalization of cash values to pay annual policy loan interest are also characterized as ordinary income and taxed accordingly.Answered on June 23, 2013+01+1 this answer
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63333 POINTSview profilePeggy MaceMost of the U.S.When a life insurance policy matures, the face amount of the policy can be paid to the beneficiary (if maturity occurs due to death of the insured) or to the policy owner (if maturity occurs due to the cash value reaches the amount of the death benefit, or endows).Answered on June 23, 2013flag this answer
37376 POINTSview profileDavid G. Pipes, CLU®, RICP®Business Development Officer, T.D. McNeil Insurance Services, Fresno, CaliforniaThe word “mature” means that it has reached completion. If a whole life policy matures the requirement for premium payments ceases. The death benefit will be paid on the death of the insured. If the policy has also endowed, the face amount would be available for the insured’s personal use. Taxation is a technical subject but generally, the proceeds are income tax free except to the extent that they exceed the amount of all the premiums paid.Answered on September 10, 2014flag this answer
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