Life Insurance is an indemnification or protection product. However, permanent cash value life insurance that is designed as a non-modified endowment contract can also generate tax free supplemental income via withdrawals of basis after 15 years* and policy loans of gain as long as the contract is kept in force for the life of the policy insured. (*The force out rule governs the first 15 years of a life insurance policy, including withdrawals.)
No, life insurance is not usually considered income for income tax purposes. If you receive the death benefit in regular payments rather than a lump sum, the interest only will be considered income.
There are some caveats to this, especially with cash value policies. But generally speaking, life insurance is not counted as income.
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There are some caveats to this, especially with cash value policies. But generally speaking, life insurance is not counted as income.