Tax effect of cashing in life insurance policy
We have a small life insurance policy on our daughter who is now 40, she and her partner just bought a house and I was wondering if we cashed in the policy and gave that to her, would that be taxable income for us or her? Thank you!
Terry Says
That depends on the cash value and the amount of premium you have paid in. The best way to find out is to contact the insurance company, give them the policy number, and ask about the tax impact of cashing it in. They will give you the specific amount that would be taxable, and it would be added to your ordinary income.
