London Daily

Focus on the big picture.
Wednesday, Apr 01, 2026

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
King Charles Plans US State Visit as UK Strengthens Ties with Trump Leadership
UK Regulator Launches Investigation Into Microsoft’s Business Software Practices
Kanye West Set for High-Profile Return to UK Stage at Wireless Festival
Trump Presses Europe to Strengthen Commitment as Iran Conflict Escalates
UK to Deploy Additional Troops to Middle East Amid Rising Regional Tensions
UK Authorities Face Claims of Heavy-Handed Measures in Monitoring Released Pro-Palestine Activists
Trump Calls on UK to Secure Its Own Energy as Iran Conflict Intensifies
Nigel Farage Declines Invitation to UK Conservative Conference Led by Liz Truss
Trump Warns Allies to Take Responsibility as Rift Deepens with UK and France Over Iran Conflict
How Britain’s Prime Minister Controls U.S. Bomber Access in Escalating Iran Conflict
Trump Urges Allies to Secure Their Own Oil Supplies as Hormuz Crisis Disrupts Global Energy
Russia Expels British Diplomat as UK Pushes Back Against Pressure
White House App Faces Scrutiny After Claims of Continuous User Location Tracking
BBC Faces Scrutiny Over Allegations of Paid Content Linked to Saudi Arabia
UK-France Coastal Patrol Agreement Nears Breakdown Amid Migration Pressures
UK Police Detain Pro-Palestine Activist Again Weeks After Bail Release
FTSE 100 Advances as Energy and Mining Shares Gain Amid Middle East Tensions
Eli Lilly Seeks UK Pricing Deal to Unlock Renewed Pharmaceutical Investment
Three Arrested in UK After Massive Cocaine Haul Discovered Hidden in Banana Shipment
UK Fuel Prices Poised for Further Surge Amid Global Energy Pressures
Apple Subsidiary Penalized by UK Authorities for Breach of Moscow Sanctions
Western Allies Intensify Coordinated Sanctions Strategy Against Russia
UK Lawmakers Face Criticism Over Renewed Push for Social Media Restrictions
Starmer Signals UK Crackdown on Addictive Social Media Features
Rising Costs Push One in Five UK Hospitality Businesses to the Brink of Closure
Man Arrested on Suspicion of Attempted Murder After Car Strikes Pedestrians in UK, Injuring Seven
Escalating Conflict Involving Iran Tightens Fiscal Pressures and Highlights UK Economic Vulnerabilities
UK Moves to Confront Russian ‘Shadow Fleet’ Operating in Its Waters
UK Housing Divide Deepens as Older Owners Hold Wealth While Under-30s Face Mounting Barriers
London Demonstration Calls on UK to Recognize Iranian Opposition’s Provisional Government
UK Green Party Vote on ‘Zionism is Racism’ Motion Collapses Amid Internal Disputes and Technical Failures
SNL UK Ignites Debate with Sharp Royal Satire Targeting Prince Andrew and Prince William
EU Proposes ‘Emergency Brake’ to Resolve Deadlock in UK Youth Mobility Talks
Thousands Rally in London to Oppose Rise of Far-Right Movements
Hong Kong Official Rejects Allegations of Surveillance Orders Targeting UK-Based Dissidents
PayPal Expands Cryptocurrency Services to Allow UK Users to Buy and Sell Bitcoin
UK Minister Challenges Reform Party’s ‘Pro-Family’ Agenda as Debate Intensifies
Concerns Grow Over Meningitis Risk Among UK Students Amid Warning Signs of New Outbreaks
Japanese Grand Prix 2026: Schedule, UK Start Times and Full Broadcast Details
Electric Vehicles Seen as Strategic Solution to UK Fuel Reserve Concerns
Rise of Lone-Actor Threats and Online Radicalisation Drives New Wave of Antisemitic Attacks in the UK
Canada Advances Plan to Ban Cryptocurrency Donations in Election Campaigns
UK Faces Looming Medicine Shortages as Iran Conflict Threatens Supply Chains
Deadly Meningitis Outbreak in the U.K. Highlights Urgent Need for Vaccination
Fresh Claims Emerge Over Harry and Meghan’s Australia Visit as Insider Speaks Out
NATO Assessment Indicates UK Defence Spending Has Fallen Below Alliance Average
FTSE 100 Slips as Middle East Tensions Weigh on Investor Sentiment
UK Economy Begins to Feel Early Impact of Iran Conflict as Policy Challenges Intensify
Russian National Jailed in UK After Assault Case Linked to Barron Trump’s Alert
Energy Price Surge Accelerates Shift Away from Fossil Fuels in UK Homes
×