A disbursement from a life insurance policy or annuity may result in the policy owner or beneficiaries receiving a 1099.
Common reasons for receiving a 1099-R include surrendering a whole life insurance policy or annuity for its cash value, receiving payments from a SPIA or settlement option plan, and receiving a distribution from a Modified Endowment Contract (MEC). Loan transactions on MEC policies, including signed loans, Automatic Premium Loans, and interest rollovers will generate a 1099-R. Paying off a loan at the time of a 1035 exchange or paying off a loan as part of Reduced Paid Up benefit will also generate a 1099-R. You may receive a 1099-R if you receive distributions from Fixed Period, Life Income, and Single Premium Immediate Annuity plans.
You may receive a 1099-INT if you were the beneficiary of a life insurance policy and were paid any interest on top of the death benefit or if you receive payments from a SPDA quarterly interest plan. You may also receive a 1099-INT if you were paid interest on LTC contracts.
Recipients of disbursements from LTC contracts will receive both a 1099-LTC and a 1099-INT. The 1099-LTC will reflect the non-taxable basis portion of LTC payments. The 1099-INT will reflect the taxable interest portion of LTC payments.