Surrender life insurance policy
Hi Terry, I’m considering cashing in a small life insurance policy because I could use the money. Is there any certain way of doing this or just bite the bullet and get taxed for the entire amount at one time? Any thoughts on this would be appreciated. Thank you, Tom
Terry Says
You should contact the life insurance company to find out which portion is a return of your investment, and which portion is considered taxable earnings. Then you’ll have an idea of how much money will be added to your taxable income, and how much you should set aside for paying taxes next year at this time. Note: If the amount is substantial, they may withhold some money for taxes.
