Is Life Insurance Surrender Value Taxable? 
If you decide , for whatever the reason , not to continue your permanent life insurance , and instead decide you want to cancel it and take the money out -LRB- cash surrender value -RRB- , then yes , absolutely , that money is taxable . If , instead , you decide to borrow against that policy , and later decide to keep that money rather than repay the loan , then no , that money is not taxable . So you know what to do . Thank you . GARY LANE . 