Life Insurance

[DonB]

my state: California

Hello,
I have a Life Insurance policy (MetLife) which has a face value plus money market component. That said I have cash available that I can take out, approximately $40K. I am still paying the policy premium a portion of which is for the policy and the remainder goes into the money market account. I get a small dividend check every quarter which comes directly from MetLife, at least that’s the name on the header of the check.

Currently I could really use the $40K which is available for withdrawal. My question is what tax implication there may be if I withdraw the money?

Thanks
Don

 

[adjusterjack]

A large portion of that $40K may be your own money that you have paid toward the cash value and the rest may be taxable earnings.

The life insurance company should be able to give you a breakdown.

Make sure you know the difference between a policy loan and a surrender of the policy.

Read the policy.

 

[DonB]

A large portion of that $40K may be your own money that you have paid toward the cash value and the rest may be taxable earnings.

The life insurance company should be able to give you a breakdown.

Make sure you know the difference between a policy loan and a surrender of the policy.

Read the policy.

I‘m waiting for a call back but here is what I see after logging into my ML account.

policy face value $250K
death benefit as of 08/10/23 $292,864.32

When I click on the request a cash withdrawal it indicates I have $42,531.36.

 

[adjusterjack]

Probably best to wait for your callback. I don't want to speculate if I can't read the policy.

Taxes depends on how much of that cash is your contribution and how much is earnings. It's likely the earnings portion would be taxable, unless your contribution was tax deferred.

 

[LdiJ]

I‘m waiting for a call back but here is what I see after logging into my ML account.

policy face value $250K
death benefit as of 08/10/23 $292,864.32

When I click on the request a cash withdrawal it indicates I have $42,531.36.

Again, some of that is going to be principal (not taxable) and some of it is going to be earnings (taxable)...most likely anyway. Whether or not you have to cash in the policy entirely to access that 42+k is something only your insurance company can answer. Same with the taxable amount, Talk to them.