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 The policyâs death benefit is taxable for three years after transfer. 2  If you transfer an existing life insurance policy to a trust but die within the next three years, the death benefit is still subject to estate taxes. 3  To avoid this, you can have the trust purchase the policy from the start, so there is no transfer.