How Are Life Insurance Dividends Taxed? 
Great question ! The IRS considers dividends paid to you to be an overpayment of premiums , and as such , are n't taxed . You paid taxes on the money for the premiums that you paid , so basically you were just `` over paying '' . That said , there can be situations where you would have to pay taxes if you take out loans and your policy lapses , but as long as it stays within the policy , you are fine . need more detail ? feel free to contact me , I 'm happy to help . Thanks for asking ! 