Is Cashing Out Life Insurance Taxable? 
Maybe . It depends on how much you 've paid in which is your cost basis in the contract -LRB- total premiums less withdrawals , if any -RRB- . You also need the cash surrender value . Your annual statements will show these numbers as of the anniversary date of the policy . A call to the insurance company would give you an updated amount as of now . You would have income tax liability on the gain -LRB- cash surrender value less basis -RRB- . 