New answer on: Is Life Insurance Subject To Federal Income Tax?

By: Larry Gilmore

Larry Gilmore — Fri, 31 May 2013 03:59:30 +0000

Is life insurance subject to income taxes? Usually, the answer is no. The proceeds of the death benefit are usually considered to be income tax free to the beneficiary because the policy owner had already paid taxes on the premium. Where the taxation would change would be where a tax deduction was taken on the premium.

By: Ted Ratliff

Ted Ratliff — Thu, 30 May 2013 21:07:10 +0000

In most cases the death benefit of a life insurance policy is not taxable as income. The only exception would be that if the type of policy seems to the IRS to be an investment in disguise. This is very rare. This is what makes life insurance an attractive way to save for final expenses.