how to safely terminate phone cable
They make tiny gray and blue wire nuts that ought to work, you could strip and twist all four wires together, trim, and twist on a wire nut.  You could cap each wire individually, but I'd splice / short them all together.  

I have heard two different schools of thought about "safing off" unused wires, especially wires you want taken out of use.  With line voltage, some say it's better to short / splice them and / or bond them to the EGC, others say cap them separately.  

I'll leave that discussion for another question, for a phone cable, it doesn't matter much.  One wire nut on four conductors will hold more securely and less to look at.  

If you can identify it, you should disconnect and cap it at the other end as well - probably in your house's telephone NID (network interface device).  

If you want to be really thorough, tag it in the NID with a label where the other end is, just in case someone needs it in the future.