Is Life Insurance Taxed When Paid Out?

  1. 63333 POINTS
    Peggy Mace
    Most of the U.S.
    No, life insurance is not taxed when paid out, in most cases. There are some exceptions, such as when the beneficiary is the estate; then the life insurance benefit will be subjected to the same taxes as the rest of the estate. If eligible by virtue of amount, life insurance be subject to estate tax.

    By and large, however, life insurance is not taxed when paid out, making it a very favorable gift to those who receive it.
    Answered on July 20, 2013
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