How Do You Calculate Cost Basis On Life Insurance? 
The cost basis on your life insurance policy is the amount of money you paid into it . Do you have to track this yourself ? No . Call your carrier and they will give me the figure . What then ? First of all , you will note that the amount of money that you paid in premium is a lot less than the benefit that is currently available . Life insurance is an extremely cost-effective way to provide your estate and heirs with money . What if you are concerned as well with your cash account ? Perhaps you are considering withdrawing some of the money in that account , or taking it out in the form of a loan . Your question probably is whether or not any portion of that sum will be taxed . Your tax advisor will tell you something to the effect that you will be taxed on any amount distributed that is greater than what you put in . Go ahead and ask . Also very important : you could very well reduce the amount of your survivor benefit with that distribution . Be very careful to not shortchange your estate or your heirs . 