I have had a cancer insurance policy with AFLAC for 20 years. One of the provisions of the policy is to give a payout to me if I go for 20 years without a cancer claim. I received $7,200 from them this year for that payout. Is it taxable? If so, at what rate (income, dividends, etc)?

ANSWER

Expert Abraham Itani's Answer:

Cash payout from cancer insurance policy, does not add to your taxable income. This means that the amount you receive will not increase your tax liability for the year.

Since you pay the premiums with after-tax dollars, you do not have to worry about tax liability when you receive benefits.

I hope this was helpfull.

Abraham Itani, CPA

Abraham Itani, CPA

New Jersey

20+ yrs experience

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12 Ans.