[Investments] Topic: Life insurance policy?????
Joined: Sep 2007
Posted: 7/20/2010 9:38:26 PM
I have a universal life policy that I'm thinking of cashing out. I am way over-insured right now. I've had it for over 15 years, and the cash value is about $14,000. I've had it long enough, there is no penalty for terminating it. My question is, if I roll it to a IRA, or some other investment, do I pay the taxes now? I don't "need" the money right now, and I'm not paying the premiums now, so it's getting smaller every month. Any help would be appreciated!!!!!!!!
Joined: Oct 2009
Posted: 7/21/2010 12:38:23 PM
its likely you'd lose at last 10% to uncle sam if you make an unqualified withdrawl, probably best to roll it over but read the small print
Joined: Oct 2006
Posted: 7/28/2010 2:24:56 AM
You need to find out what your cost basis is on the contract. This is usually the sum of all premiums paid over the life of the policy. Any gain taken in excess of the cost basis will be taxed as ordinary income. The cash value is reducing because cost of insurance/policy expenses are still being charged.
Joined: Sep 2007
Posted: 7/28/2010 11:07:30 AM
Thanks for the replies. Kasper, I 'm sure the premiums are more than the cash value now. I just called, and the cash value and surrender value are the same amount. I just think if I cash it out, and put it in my bank account, the 11,600 (I was off on the value), will turn in to 8,000, or whatever the amount will be after they take the income tax. Or as you are saying, I never really made any "income".....
You have entered the forum as a GUEST.
to post or reply.
Terms of Service
Covers RSS feeds
Covers Facebook Page
Covers on Twitter
Copyright © 1995-
Activities offered by advertising links to other sites may be deemed an illegal activity in certain jurisdictions. Viewers are specifically warned that they should inquire into the legality of participating in any games and/or activities offered by such other sites. The owner of this website assumes no responsibility for the actions by and makes no representation or endorsement of any of these games and/or activities offered by the advertiser. As a condition of viewing this website viewers agree to hold the owner of this website harmless from any claims arising from the viewer’s participation in any of the games and/or activities offered by the advertiser.