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Life insurance policy

Asked Nov 20, 2007, 04:58 AM — 3 Answers
Will the insurance company deduct any taxes on a life insurance policy? Is the year end taxable?

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Fr_Chuck's Avatar
Fr_Chuck Posts: 72,597, Reputation: 37026
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#2

Nov 20, 2007, 05:39 AM


What sort of payoff, is this a payoff of the interest and principal to the owner, or is it a death benifit.

** the death benifit is not normally taxable.
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ebaines's Avatar
ebaines Posts: 10,033, Reputation: 5529
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#3

Nov 20, 2007, 05:52 AM
If you are cashing out a policy that may have a gain (for example whole life or variable policy), any gain in the policy is taxable income. The insurance company will send you a 1099 that details the amount of the gain. The bad news is that if you have a loss, the amount of the loss is NOT deductible.
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AtlantaTaxExpert's Avatar
AtlantaTaxExpert Posts: 19,865, Reputation: 3723
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#4

Nov 20, 2007, 10:41 AM


Ebaines analysis is accurate.

If you are talking about a death benefit, NO income tax is due.

There MAY be some estate tax considerations, but that is not likely.
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