Erin bought a $100,000 whole life insurance policy. When she is 65 she decides to surrender the policy for its cash value of $60,000. Of the cash value, $50,000 is premiums. How much of Erin's cash surrender is taxable?

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21-06-2022
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Erin bought a $100,000 whole life insurance policy. When she is 65 she decides to surrender the policy for its cash value of $60,000. Of the cash value, $50,000 is premiums. How much of Erin's cash surrender is taxable?

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monikachinwaal55 monikachinwaal55 · Answer 1 · 2022-06-30T10:20:14+02:00

The difference between the cash value and the premiums paid is taxable upon policy surrender ($60,000 - $50,000 = $10,000). Erin's cash surrender that is taxable is $10,000.

What is cash surrender value of whole life insurance and how it is calculated?

Cash surrender value is the amount that remains after the fees when permanent life insurance policy has been cancelled.

Cash surrender value of whole life insurance can calculated by adding up the total payments being made to the insurance policy and then subtract the fees that has been charged by the insurance company for surrendering the policy.

In short, Cash surrender value is the amount left over after fees when you cancel a permanent life insurance policy.

Learn more about the cash surrender value here:-

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