Life Insurance and Tax Question

[garyt]

So my Dad who is 99 evidently out lived his life insurance and they cut him a check for the total amount. Is this taxable income for him?

 

[COcheesehead]

Depends. Is it more than he paid in premiums or less? I think I know the answer.

 

[CRLLS]

I annuitized my policy. They write me a check every month. The part of that that was returning my premiums is not taxed. The part that is above that is taxable. I suspect that your dad's is a similar case. You should be able to get the correct answer from the insurance company as how much will be reported as taxable.

 

[pb4uski]

Part of it will be taxable income for him.

His taxable gain will be the proceeds from the policy less the premiums paid. I cashed in a 46 year old whole life policy a few months ago and the gain was 70% of the cash value.

Did they withhold tax?

The insurance company should be able to tell you the taxable gain. Mine was in the paperwork that I received on the surrender.

 

[garyt]

Depends. Is it more than he paid in premiums or less? I think I know the answer.

I'm pretty sure he paid more in premiums then he got from what I can tell.

 

[garyt]

Part of it will be taxable income for him.

His taxable gain will be the proceeds from the policy less the premiums paid. I cashed in a 46 year old whole life policy a few months ago and the gain was 70% of the cash value.

Did they withhold tax?

The insurance company should be able to tell you the taxable gain. Mine was in the paperwork that I received on the surrender.

Yea, no info in the check he got. I'll give them a call.