When you terminate your life insurance policy/Carlos Pueblo

When you terminate your life insurance policy/Carlos Pueblo

When you terminate your life policy, you must pay the tax of your gain of cash value. Of course, if it is the proceed of your death benefit, it is income tax free, yet the surrender value is not a death proceed. I want to reverse my statement to a former client of mine who bought two policies from me back in 1993. I have been terminated of my contract for almost 20 years and is no longer associated with that company; however, she is an orphan policy owner and doesn't have a service agent, lives in Taipei, Taiwan, and must rely her daughter to assist her to get the policy service through the 1-800 toll free numbers.

My problem is that I don't know how to call Taiwan with my i-phone; therefore, I expect that she will call me back. It is a variable life policy which is invested in the mutual fund. I recommended her to a fund which was the same as my retirement fund with the company. We all are benefit from the growth prospect of the stock market and I hope that she will get her money as soon as possible.

However, there is a tax consequence needed to be concerned. I like to discuss the matter with her, as a friend, I like to give her some recommendation to discuss the matter with her accountant. I would compare with the total surrender to a cash value loan to see which is more to get especially to keep the policy in force as long as pay the premium. As I understand that the policy loan rate is minimum because that is your own money and the the life company must pay the interest to that loan to the policy. When you die, the policy will pay the proceed less than the loan and interest.