In regard to the Owner of the policy, if you leave the cash value in your policy, it grows tax deferred. If you take it out, the life insurance cash value that is below your policy's "basis" is not considered taxable income. Cost basis is the premiums you paid into the policy, minus any dividends that may have been already paid to you. If cash value greater than basis is paid out, the amount above basis is taxable.
Licensed Life Agent, Life and Finance/ 50 States, New York
Cash Value for a life insurance policy is not taxable as income. Cash Value is tax deferred upon growth when the premium is paid of and accumulate compounded. Tax is applied if there is a basis. of you have 20,000 in cash value and you'd basis is 15,000 you withdraw 8,000 you will not be taxed since its bow your basis. If it is handed to beneficiary after death then will not be taxed.
Agent Owner, Gilmore Insurance Services, Marysville, Washington State
Is life insurance cash value taxable income? Yes, no, maybe depending on how your policy is structured. Depending on the type of cash value life insurance you purchase and how much you fund it, there can be taxable income situations. There are choices you can make with some policies that create current income taxes on the gains. Most people avoid this election choice so their policy can grow tax deferred.
Cash values can be withdrawn several ways as well to be non taxable. Death Benefits to beneficiaries are usually always tax free.
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Cash values can be withdrawn several ways as well to be non taxable. Death Benefits to beneficiaries are usually always tax free.