Education >> Confused About Insurance?
Question- I cashed in an insurance policy I owned for 55 years. The monthly premium was $182. Will I be liable for taxes on the proceeds?
Question: I cashed in an insurance policy I owned for 55 years. The monthly premium was $182. Will I be liable for taxes on the proceeds?
Ric: Yes, but the amount might be small. Subtract the $120,120 you paid in premiums ($182 per month for 55 years) from the amount they sent you. You’ll owe income taxes only on the excess (if any).
If you received less than the amount your heirs would have received as a death benefit, it might have been better to have continued paying the monthly premium so your heirs would have received the death benefit. They might have gotten more — and tax-free as well.
This is the kind of question we prefer you ask before you act.
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