Summary of H.J.Res.88 - 114th Congress (2015-2016): Disapproving the rule submitted by the Department of Labor relating to the definition of the term Fiduciary. Loc.gov
If my clientâs policy matures prior to the insuredâs death, the policy will typically pay out its cash value. How will this sum be taxed? If the policy matures prior to an insuredâs death, it ceases to be life insurance and is treated as a taxable distribution. As such, the cash value will be taxed as ordinary income to the extent it exceeds the taxpayerâs basis into the policy (i.e., the sum of after-tax premiums) .
Benefits: Sometimes taxable. Whether disability insurance benefits are taxable depends on how you paid your premiums, says Sherman. If you pay your premiums with pretax income, then the benefits are considered taxable income, he says. If you pay the premiums with after-tax dollars, then the benefits are tax-free..