Per IRS Publication 525 Taxable and Nontaxable Income, on page 22:

Surrender of policy for cash. If you surrender a life insurance policy for cash, you must include in income any proceeds that are morethan the cost of the life insurance policy. In mostcases, your cost (or investment in the contract)is the total of premiums that you paid for the lifeinsurance policy, less any refunded premiums,rebates, dividends, or unrepaid loans thatweren’t included in your income.

You should receive a Form 1099-R showingthe total proceeds and the taxable part. Reportthese amounts on lines 5a and 5b of Form 1040or 1040-SR.

To report the total proceeds and taxable portion:

1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
2. Click Retirement Plan Income in the Federal Quick Q&A Topics menu to expand, then click IRA, 401(k), and pension plan distribution (Form 1099-R).
3. Click + Add Form 1099-R to create a new copy of the form or click Edit to review a form already created.
4. Click Quick Entry to scroll down to answer all applicable questions or click Step-by-Step Guidance to proceed with the program interview questions.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.