What Are The Tax Implications Of A Senior Life Settlement?

Tax implications will vary, but this example can help demonstrate a typical situation:

A Senior Life Settlement of $250,000 is received by the former policy owner. The policy had a $70,000 cash surrender value and a cost basis of $50,000. The $180,000 difference between the Senior Life Settlement and cash surrender value is taxed as a capital gain. The $20,000 difference between the surrender value and the cost basis is taxed as ordinary income.

P & T Financial suggests you consult a tax professional when considering a financial strategy such as a senior life settlement.