LeoGlossary: Cost Basis (Insurance)

For a permanent life insurance policy, this is the sum of all your insurance payments. If your cash value is higher than the amount you paid in premiums, the remaining money represents your gains. For example, if you paid $20,000 in insurance premiums and have a cash value balance of $25,000, you have a cost basis of $20,000 and the other $5,000 is from your gains.

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