Question

whole life insurance policy

Forum|Forum|6 years ago
July 10, 2019
1 reply
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I am looking to cancel my whole life policy. My advisor is telling me to take out a loan from it, because if I cancel it I loose all the cash in it, and then a month later to cancel the policy since I don't have to pay it back because its the money I put in it. What will be the tax ramifications if I do this?

A

Anonymous_

Employee

@dltasig2001 wrote:
I am looking to cancel my whole life policy. My advisor is telling me to take out a loan from it, because if I cancel it I loose all the cash in it, and then a month later to cancel the policy since I don't have to pay it back because its the money I put in it. What will be the tax ramifications if I do this?

You need to check with your tax advisor, but whole life policies typically have a cash value and loans therefrom are tax-free as a result (i.e., you are more or less borrowing from yourself).