Is The Cash Surrender Value Of Life Insurance Taxable? 
The cash surrender value in life insurance is only taxable on the amount over your basis . Let me explain . Basis is considered the premium you paid in . For example , lets say over 20 years , you paid $ 1000 per year , totaling $ 20k . In this example , the cash value is $ 35k . The taxable amount is going to be what you have earned over the $ 20k you put in so $ 15,000 in this example is taxable . Consider however not surrendering this policy but taking loans out instead . Loans are not taxable , do not have to be paid back although I would recommend doing so in many situations , and as long as you pay the premiums on the policy to keep it in force , you will have no tax concerns . The Key here is NOT to let the policy lapse . Otherwise you may have a taxable event if the money you took out as a loan is greater that your basis . Contact your agent or reach out to me if you would like to learn why I would recommend you pay yourself back on the loan . Good Luck . 