Why Are Life Insurance Proceeds Not Taxable?
61667 POINTSview profileSteve SavantSyndicated Financial Columnist, Host of the weekly talk show Steve Savant's Money, the Name of the Game, Scottsdale ArizonaIn most scenarios the death benefit proceeds are paid to the beneficiaries of life insurance policy tax free. There may be some tax exposure in business and estate scenarios. But the government made a decision a hundred years ago that life insurance presented a social good that warranted the tax preference.Answered on September 3, 2013flag this answer.JPG)
63333 POINTSview profilePeggy MaceMost of the U.S.Life insurance started as a financial vehicle to protect widows and orphans. It was determined to not tax those proceeds, as they in fact saved the government money that would have gone to caring for those who had lost spouse or parents, had they not had life insurance. Since then, life insurance is used for many more purposes, but is still seen as a benefit that should remain tax free due to its alleviation of financial devastation for survivors at the time of death.Answered on September 3, 2013flag this answer
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