Shortcut Navigation:

Question for the Money Doctors

Question submitted on Apr 28, 2012.

Question

My mother is transfering ownership of her life insurance policy over to my sister and myself. Therefore, we had to fill out a tax for W-9. I was wondering why we had to fill this form out if life insurance was tax-free?

Answer

Thank you for the question.  Life insurance is technically not "tax-free" if you cancel the policy and withdraw the cash value.  If the policy has cash inside the policy, any gains in the policy would be taxed if the policy was canceled and the cash taken out.  I hope that helps.  For personalized information, I suggest that you locate a local CPA/PFS.  You can search for a professional in your area by going to www.findapfs.com

.  

Best regards,

Cory Colquette, MBA, CPA/PFS 


For additional information visit http://www.360financialliteracy.org/