Co-Founder, Coastal Financial Partners Group, California
When you surrender your life insurance policy, your coverage ends and you stop paying premiums. The insurance company will pay the cash surrender value of the policy which will take a week or two.
The cash surrender value is less than the total cash value in the early years of a policy due to a surrender charge which is usually a charge that decline to zero over a period of 5-20 years, depending on the policy. Any policy loans outstanding also reduce the cash value.
If you have any gain in the policy - cash surrender value less premiums - then it will be taxable as income.
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The cash surrender value is less than the total cash value in the early years of a policy due to a surrender charge which is usually a charge that decline to zero over a period of 5-20 years, depending on the policy. Any policy loans outstanding also reduce the cash value.
If you have any gain in the policy - cash surrender value less premiums - then it will be taxable as income.