What Are The Tax Implications Of Cashing In A Life Insurance Policy? 
In Canada , if you surrender a life insurance policy and the cash value exceeds the adjusted cost base it is taxed as a gain . The adjusted cost base is the total premiums paid , less the Net Cost of Pure Insurance which is a rate set by the government . You can also trigger a deemed disposition if you borrow in excess of the adjusted cost base and with most transfers of ownership . Before you surrender a policy , check with your agent to be sure you are informed decision and to review other options . If you have further questions , or feel that I could be of assistance , please do not hesitate to contact me . If you would like to work with a local life insurance broker , you could start with a Google search . For example , if you search for : life insurance broker Halifax or life insurance agent Halifax , my name , along with several others , will come up . You can use the same method to find a life insurance broker in your community . 