Cashing Out Whole Life?

Roger asks Dave about cashing out his whole life insurance policy.

QUESTION: Roger wants to cash out his whole life policy and get a term life policy.  What are the tax implications?

ANSWER:  In your situation, you’re not going to have any taxes.  You haven’t even gotten out what you put in.  Whole life policies rarely make you enough money on which to pay any taxes.  Just make sure you get your term life policy in place before canceling the whole life.

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