1. 1165 POINTS
    Chris Abrams
    Founder, Abrams Insurance Solutions, Inc., San Diego, CA
    The death benefit is not subject to income tax in any state if it is received as a lump sum.  Some life insurance companies may offer a larger amount if the benefit is received over time, and in that case, the additional amount received over the base benefit is subject to income tax.  Estate taxes might apply.
    Answered on August 15, 2013
  2. 63333 POINTS
    Peggy Mace
    Most of the U.S.
    Life insurance in South Carolina is not charged income tax if left to a beneficiary other than the estate. If the policy is cashed in before death and the money in the policy is more than the face amount, the excess can be taxed. Interest on the money paid out to the beneficiary is also taxed, when paid out on a payment plan.
    Answered on August 30, 2013
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