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) .
1 Whole life non-participating policy and universal life insurance policy: As long as cash value continues to grow in an active policy, the cash value is not taxable until one of the following occurs: 2  You cancel or âsurrenderâ the policy.  You transfer the life insurance policy, such as when you assign or sell the policy.