David RacichPRO
    Fountain Hills, Arizona
    Life Insurance is generally not taxed at death, but may be includable in the estate and, if so, taxed at estate tax rates. There are also business scenarios, where the death benefit is paid to the corporation that may trigger ordinary income tax or be treated like a preference item which could also trigger the alternative minimum tax. 
    Answered on June 22, 2013
  2. 210 POINTS
    Barry Goldwater
    Principal, Goldwater Financial Group, Boston
    Usually it is not taxed at death. Sometimes, business owned life insurance will get caught in the AMT tax, but the death proceeds are tax free. If you die as the insured and the owner and your estate is worth more the $5.25 million single, there will be an estate tax due, but the life insurance proceeds are distributed tax free.
    Answered on June 22, 2013
  3. 10968 POINTS
    Tim Wilhoit
    Owner, Your Friend 4 Life, Brentwood TN
    One of the best aspects of life insurance is that it is income tax free if set up properly when purchased. If the beneficiary or contingent beneficiary is a named party (loved one) and not to the estate in almost every circumstance the life insurance proceeds are tax free.
    Answered on July 3, 2014
  4. 5877 POINTS
    Stan Cox II
    Insurance Adviser - Broker, SC Insurance Services, Oahu, Hawaii
    The death benefit from a life insurance policy when paid to a beneficiary is not taxed. However when a person's estate exceeds $5,2 million dollars in value there are estate taxes that are incurred. So in those cases the death benefit is added to the total of the value of the estate and therefore taxed. This is why many high net worth individuals will implement life insurance and assign it to a trust for the purpose of paying the estate taxes upon their death so their beneficiaries don't have to deal with the harsh realities of having to come up with the money to pay those taxes. In many cases requiring that property be sold in order to cover them.
    Answered on November 22, 2015
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