Rich_by_the_Bay
Moderator Emeritus
I have an old NML whole life policy which seemed like a good think to cash out of (no need for the coverage, money can do better elsewhere, etc.). Based on prior policy loans years ago, the cash value is about $28K with a death benefit of $77K.
So, I called to get the forms and was told that the policy had a cash basis of $112, and that almost the entire cash value would be considered as income and generate a 1099. My accountant really questions this, and NML - while reputedly a good company -- is perfectly capable of interpreting the tax code in such a way as to discourage cashing out.
Can anyone shed some light on his? Is cash value of a whole life policy considered taxable income?
So, I called to get the forms and was told that the policy had a cash basis of $112, and that almost the entire cash value would be considered as income and generate a 1099. My accountant really questions this, and NML - while reputedly a good company -- is perfectly capable of interpreting the tax code in such a way as to discourage cashing out.
Can anyone shed some light on his? Is cash value of a whole life policy considered taxable income?