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    ferchak48's Avatar
    ferchak48 Posts: 20, Reputation: 1
    New Member

    Nov 20, 2007, 05:58 AM
    Life insurance policy
    Will the insurance company deduct any taxes on a life insurance policy? Is the year end taxable?
    Fr_Chuck's Avatar
    Fr_Chuck Posts: 81,301, Reputation: 7692

    Nov 20, 2007, 06:39 AM
    What sort of payoff, is this a payoff of the interest and principal to the owner, or is it a death benefit.

    ** the death benefit is not normally taxable.
    ebaines's Avatar
    ebaines Posts: 12,132, Reputation: 1307

    Nov 20, 2007, 06:52 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.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert

    Nov 20, 2007, 11:41 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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