Hi experts, I have purchased the VUL life insurance and I have put the premium of $23,000. If I terminate the policy now, I will get the cash value of $21,000. My question is if I take out the cash value now, do I need to pay any taxes for this or report the loss for this or file the form 1099 next year? Thank you very much in advance!

In general, certain types of cash value life insurance policies ,i.e, universal and traditional whole life policies. may not allow you to withdraw from your cash value at all. However, aslongas your policy does allow such withdrawals, any withdrawal you make will typically be tax free up to your basis in the policy , in your case up to $23K. Your basis is the amount of premiums you have paid into the policy, minus any prior dividends paid or previous withdrawals. You already paid income tax on those dollars once, so they won't be taxed again when you withdraw them from the policy; you have a cash value life insurance policy with a cash value of $21K. Your basis in the policy is $23K. as you make a withdrawal of $23K or less, there will be no income tax consequences. Be aware that surrender charges may also apply when you withdraw from your policy, even if you withdraw only up to your basis. One way to avoid this and still access your money is to take a policy loan from the insurance company, using the cash value in the policy as collateral. The amount you borrow is generally not treated as taxable income as long as you repay the loan, and there are no surrender charges because you're not actually withdrawing your money. But you'll have to pay interest on the loan, which is not tax deductible. A surrender charge is a fee your cost that your insurance company imposes for the cancellation of your policy, or for reducing the face amount of life insurance. you need toocntat the ADMIN fo more info on the surrender charge