Help understanding the surrendering my Whole Life Policy

So I recently initiated the surrender process for my Whole Life Insurance Policy ($500,000) through MassMutual. I am 22 years old and live in the state of Kansas. I am switching to a term life policy through BannerLife. I set this plan up with the help of my parents. The policy is in my name and I am the owner, but they have made every single payment for this policy I have had the policy for 2.5 years and the premiums are not in our best interest. I have never withdrawn any cash, taken a loan or dividend of any sort. We have only payed monthly premiums.

I called in to surrender the policy and I was told I had about $2,400 in cash value. I was sent a few documents over the last couple days:

The first document was a “Tax Quote” and listed the following: * Cost Basis: $14,000 * Taxable Gain: $0

The second document was information regarding the surrender and stated that I may be susceptible to taxable income such as a 10% tax penalty.

The third document is the surrender form where I am to fill out sections regarding termination of my policy, tax payer information, tax withholding, disbursement information, etc.

I unfortunately lack knowledge to fully comprehend the exact meaning of these things. At 22 years old, I should know but I am looking for help to understand what I am dealing with.

What is the cost basis? Do I owe that money or is that the total monthly premiums payed thus far?

Will we receive the $2400 in cash value as disbursement once surrendered?

Will I have any tax penalty’s or owe money for surrendering?

Will the 1099 form be created under my name? Can it be under my parents as they made the payments and will be receiving the disbursement?

submitted by /u/bensmith0525
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