London Daily

Focus on the big picture.
Thursday, Oct 09, 2025

Turning 100? Your birthday gift could be an unexpected tax

Cash value life insurance policies have a savings component that allows you to store money on a tax-free basis.. Many policies that were issued before 2004 have a maturity date of 100. At that time, your insurance company will pay you the cash value, which can result in taxes. You may have options, including pushing out the maturity even further.

You can never be too old for a surprise tax bill from the IRS.

Whether you’re a business owner or an individual with an elaborate estate, you may use cash value life insurance to solve any complex financial planning needs.

These contracts include a savings component, known as cash value, where money can grow free of taxes.

Your heirs generally get a tax-free death benefit payout if you die.

However, if you beat the insurance company by making it to 95 or 100, the insurer could cash you out and leave you owing the IRS.

“You’ve turned an income-tax-free death benefit into a tax bill, and most likely it will pay less than the death benefit, too,” said Tom Love, vice president of insurance analytics at Valmark Financial Group in Akron, Ohio.


Knowing maturity

How much you pay in premiums is based on your insurance company’s mortality tables, which measure the odds of a person of a certain age dying in a given year.

So-called permanent life insurance, including cash value insurance, is meant to stay in force if you pay those premiums. This makes it different from term insurance, which may cover you for 20 or 30 years.

Permanent policies also have a maturity date that historically has kicked in around age 100. “There are a whole lot of policies that also have maturities around age 95,” said Love. “So this can be a bigger issue.”

That means when you turn 100, your insurance company will pay you the cash value of your policy and end the contract.

Not only might this amount be less than the death benefit your heirs would have otherwise received, but you might also be taxed on the amount that exceeds the premiums you’ve paid.

To make things worse, if you have large loan against your policy at age 100, your debt will be forgiven, but you’ll still be on the hook for taxes for the cash value and the amount borrowed.

“Worst result is that you have no cash, but you still owe the tax,” said Barry D. Flagg, a certified financial planner and founder of Veralytic, a Tampa, Florida, publisher of life insurance pricing and research. “In both cases, you lose your life insurance.


Living longer

Many policies that were issued before 2004 mature at 100, said Michael Lovendusky, vice president and associate general counsel of the American Council of Life Insurers.

“At the time when these tables were established, it was something that the industry didn’t think about,” said Love.

“The odds of people living to 100 were insignificant from an actuarial perspective,” he said.

Globally, there were close to half a million individuals over age 100 in 2015, according to the Pew Research Center. That number is expected to grow to nearly 3.7 million by 2050.

To contend with the growing number of centenarians, in 2004 state insurance commissioners adopted an updated mortality table that has pushed out the maturity date of new policies to age 121.

This means you can keep your coverage intact well beyond your 100th birthday if you have one of these newer policies.


Planning for longevity

If you’re in your 60s or 70s, it just might be time to talk to your financial advisor about what might happen as your 100th birthday approaches.


Here are two potential options:

Changing your contract: If you’re young and insurable enough, ask your advisor whether it would make sense to switch to a new contract with a maturity date of 121.

Maturity extension rider: Some contracts come with a rider or an endorsement that can push out the maturity date past 100 without having to trade in the contract.

“The sooner you address it the more viable options you will have,” said Love. “The longer you wait, you might not be able to get a different policy if you’re too old.”

Newsletter

Related Articles

0:00
0:00
Close
France: Less Than a Month After His Appointment, the New French Prime Minister Resigns
Hungarian Prime Minister Viktor Orbán stated that Hungary will not adopt the euro because the European Union is falling apart.
Sarah Mullally Becomes First Woman Appointed Archbishop of Canterbury
Mayor in western Germany in intensive care after stabbing
Australian government pays Deloitte nearly half a million dollars for a report built on fabricated quotes, fake citations, and AI-generated nonsense.
US Prosecutors Gained Legal Approval to Hack Telegram Servers
Macron Faces Intensifying Pressure to Resign or Trigger New Elections Amid France’s Political Turmoil
Standard Chartered Names Roberto Hoornweg as Sole Head of Corporate & Investment Banking
UK Asylum Housing Firm Faces Backlash Over £187 Million Profits and Poor Living Conditions
UK Police Crack Major Gang in Smuggling of up to 40,000 Stolen Phones to China
BYD’s UK Sales Soar Nearly Nine-Fold, Making Britain Its Biggest Market Outside China
Trump Proposes Farm Bailout from Tariff Revenues Amid Backlash from Other Industries
FIFA Accuses Malaysia of Forging Citizenship Documents, Suspends Seven Footballers
Latvia to Bar Tourist and Occasional Buses to Russia and Belarus Until 2026
A Dollar Coin Featuring Trump’s Portrait Expected to Be Issued Next Year
Australia Orders X to Block Murder Videos, Citing Online Safety and Public Exposure
Three Scientists Awarded Nobel Prize in Medicine for Discovery of Immune Self-Tolerance Mechanism
OpenAI and AMD Forge Landmark AI-Chip Alliance with Equity Option
Munich Airport Reopens After Second Drone Shutdown
France Names New Government Amid Political Crisis
Trump Stands Firm in Shutdown Showdown and Declares War on Drug Cartels — Turning Crisis into Opportunity
Surge of U.S. Billionaires Transforms London’s Peninsula Apartments into Ultra-Luxury Stronghold
Pro Europe and Anti-War Babiš Poised to Return to Power After Czech Parliamentary Vote
Jeff Bezos Calls AI Surge a ‘Good’ Bubble, Urges Focus on Lasting Innovation
Japan’s Ruling Party Chooses Sanae Takaichi, Clearing Path to First Female Prime Minister
Sean ‘Diddy’ Combs Sentenced to Fifty Months in Prison Following Prostitution Conviction
Taylor Swift’s ‘Showgirl’ Launch Extends Billion-Dollar Empire
Trump Administration Launches “TrumpRx” Plan to Enable Direct Drug Sales at Deep Discounts
Trump Announces Intention to Impose 100 Percent Tariff on Foreign-Made Films
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Singapore and Hong Kong Vie to Dominate Asia’s Rising Gold Trade
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Manhattan Sees Surge in Office-to-Housing Conversions, Highest Since 2008
Switzerland and U.S. Issue Joint Assurance Against Currency Manipulation
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Thomas Jacob Sanford Named as Suspect in Deadly Michigan Church Shooting and Arson
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
New York Man Arrested After On-Air Confession to 2017 Parents’ Murders
U.S. Defense Chief Orders Sudden Summit of Hundreds of Generals and Admirals
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
Trump Claims FBI Planted 274 Agents at Capitol Riot, Citing Unverified Reports
India: Internet Suspended in Bareilly Amid Communal Clashes Between Muslims and Hindus
Supreme Court Extends Freeze on Nearly $5 Billion in U.S. Foreign Aid at Trump’s Request
Archaeologists Recover Statues and Temples from 2,000-Year-Old Sunken City off Alexandria
China Deploys 2,000 Workers to Spain to Build Major EV Battery Factory, Raising European Dependence
Speed Takes Over: How Drive-Through Coffee Chains Are Rewriting U.S. Coffee Culture
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Ringo Starr Champions Enduring Beatles Legacy While Debuting Las Vegas Art Show
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Colombian President Petro Vows to Mobilize Volunteers for Gaza and Joins List of Fighters
×