1. 63333 POINTS
    Peggy Mace
    Most of the U.S.
    There are calculators that you can find on the internet that will calculate the cost basis on your life insurance for you. Most people simply call their life insurance carrier and ask them to give them that figure. Knowing the cost basis of your permanent life insurance policy helps you know how much of the cash value, if any, is taxable.
    Answered on October 23, 2014
  2. 7479 POINTS
    Steve Kobrin
    President, The Firm of Steven H. Kobrin, LUTCF, 6-05 Saddle River Rd #103, Fair Lawn, NJ 07410
    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.
    Answered on July 20, 2015
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