Does A Beneficiary Have To Pay Taxes On A Life Insurance Policy?
37376 POINTSContact Meview profileDavid G. Pipes, CLU®, RICP®PROBusiness Development Officer, T.D. McNeil Insurance Services, Fresno, CaliforniaGenerally a beneficiary doesn't pay income tax on the lump sum distribution of the proceeds of a life insurance policy. They are liable for any interest that might accrue which is particularly applicable if they elect a settlement option other than lump sum. If the policy is owned by the descedent, it is then includable in the estate and can be subject to either state or federal death taxes.Answered on February 7, 2014+31+1 this answer
0flag this answerview more answers by David G. Pipes, CLU®, RICP®
14231 POINTSContact Meview profileTom SheehanPROAgency Owner, The Thomas G Sheehan Agency, 27 Glen Road Sandy Hook, CT 06482Life Insurance proceeds are non taxable when paid to the named beneficiary, or beneficiaries. Now, once the beneficiary receives the proceeds, if they are subsequently invested or deposited into a savings account, for example, then any interest or other form of growth that the initial deposited money generates IS then taxable.Answered on February 7, 2014+11+1 this answer 0flag this answerview more answers by Tom Sheehan
0 POINTSview profileMack DudayevCEO, InsureChance Inc,Life insurance payout is usually not taxable however if the policy was owned by the person of passing and the payout is above $5.34 million. Federal estate tax will have to be paid. If the payout is below that or if the owner of the policy are the beneficiaries the estate tax will not have to be paid.Answered on February 7, 2014flag this answer
21750 POINTSContact Meview profileJim WinklerPROCEO/Owner, Winkler Financial Group, Houston, TexasGreat question! There are cases where you might be liable for some estate taxes, but as far as income taxes go, no, your windfall from a life insurance policy is not taxable. This is one of the best reasons to own a policy - you can pass along money to help your survivors . Thanks for asking!Answered on May 5, 2014+01+1 this answer 0flag this answerview more answers by Jim Winkler- 616 POINTSContact Meview profileRobert J Russell - Finalist for Broker of the Year 2015Broker Owner, InsuranceAgentsSelling.com, United States (Most States)Whenever the beneficiary receives the proceeds from a death claim, he will not pay taxes on that dollar amount. Example - $100,000 is paid to spouse, she will not pay taxes on that amount because life insurance is always a tax free benefit. My recommendation is to annuitize the benefit so that she will receive a monthly income. This way she will not be inclined to blow it all but can manage it over a long period of time.Answered on February 23, 2016+01+1 this answer 0flag this answerview more answers by Robert J Russell - Finalist for Broker of the Year 2015
Did you find these answers helpful?
Yes
No
Go!
Add Your Answer To This Question
You must be logged in to add your answer.
