If you receive a life insurance death benefit as the result of being a beneficiary on a policy, you will not have to pay income tax on it, in most circumstances.
If the Insured person also owned the policy, and the death benefit brought the value of the estate over the limit exempt from estate taxes ($5,250,000 in 2013), estate taxes may need to be paid.
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If the Insured person also owned the policy, and the death benefit brought the value of the estate over the limit exempt from estate taxes ($5,250,000 in 2013), estate taxes may need to be paid.