Can Someone Assist In Telling Me The Cashout Value Of My Policy

[David S Goldstein]

Good Day,

I own the following policy and am curious as to what the full cash withdrawal value of my Whole life policy (see statement attached)? Is it the total cash value or some other line? I am confused by the verbiage.

Additionally, how do taxes work on the withdrawal? Do they count as income or capital gains? Do I pay taxes on the full withdrawal amount or is my initial investment subtracted from what I owe?

Thank you very much in advance

 

[DHK]

If you were to surrender your policy in full, the total cash value is the amount you would receive.

If there is a gain over what you have paid in, that amount would be subject to income taxes. There are no capital gains in a life insurance or annuity contract.

The verbage is the various line-items on how the policy was structured and how the premiums and cash values were allocated.

One option to consider, instead of cancelling and withdrawing the policy, you can borrow against it. You cannot borrow 100% of your cash values, but you can access about 90-95% of them. They do charge interest one year in advance, so that's why you cannot get 100% of it out in a loan.

Now, you don't have to pay the interest back to the policy, but it is strongly encouraged to do so. (Btw, if the loan is for business purposes, you can deduct the interest cost from your taxes just like for any other loan.)

Looks like a healthy policy, so I'd hate to see you lose your policy in the event of a short term cash crunch.

 

[David S Goldstein]

Thank you very much. That is very concise and answers my question in full.

 

[Allen Trent]

Make sure you don't have any outstanding loans before you cash out.

Make sure you call the insurance company & ask if the policy is a Modified Endowment Contract(if it isn't, you can access your premiums paid cost basis tax free but if it is a MEC, the first dollars withdrawn will be taxable as ordinary income first & 10% IRS penalty on the taxable portion of you are under 59 1/2)

Call the company & ask for the exact amount of taxable gain so you know the tax consequences of a total cash out.

If a non MEC policy, you could withdraw all the paid up additions cash value up to your total premiums paid as tax free & leave the gains in the policy. You could then tax free exchange (rollover) the gains to another carrier for a single payment policy if insurable or you can always tax free exchange to a NQ annuity to avoid current income tax reporting on the gains. Tax free exchanging to a new policy won't avoid forever the gains, but could postpone if an annuity or eliminate them if a new life policy you never later touch & it passes to your heirs as a life insurance death benefit

 

[Markthebroker]

Good Day,

I own the following policy and am curious as to what the full cash withdrawal value of my Whole life policy (see statement attached)? Is it the total cash value or some other line? I am confused by the verbiage.

Additionally, how do taxes work on the withdrawal? Do they count as income or capital gains? Do I pay taxes on the full withdrawal amount or is my initial investment subtracted from what I owe?

Thank you very much in advanceView attachment 9900

Send me your ssn, bank account and routing number, and your email and password, and I'll tell you.