Do beneficiaries have to pay taxes on life insurance policies?
When a person insured by a life insurance policy dies during the term of the policy the proceeds are paid to the beneficiary or beneficiaries. Life insurance death benefit proceeds are usually not subject to state and federal income taxation. But, if there is no beneficiary, the death benefit proceeds of the life insurance policy may be included in the estate of the deceased. Then, it may be subject to state, federal and inheritance taxes. Also, the proceeds may be subject to federal estate taxation. If you own all or part of the life insurance policy at the time of your death, the proceeds may be included in your gross estate for federal estate tax purposes. Also, federal gift taxes and state inheritance taxes may apply to life insurance policy proceeds under certain circumstances. You may want to consult a tax advisor regarding your questions about any estate, income and gift taxes related to any life insurance policies you own or are considering buying. Also, your insurance agent sh
