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) .
While TurboTaxDwayneM's answer may be accurate for most cases, I have to add an important consideration to amend that answer. I have bolded an important phrase in the information cited below. There are circumstances in which your SDI is taxable. SDI benefits are taxable only if paid as a substitute for unemployment insurance (UI) benefits. This could occur if a person was receiving UI benefits and then became disabled.