Is Life Insurance Proceed Payouts Tax Free To The Beneficiary?

When a death benefit is paid out to a beneficiary, it is not included in the beneficiary’s gross income. It does not need to be reported. However, there can be a few situations where the beneficiary is taxed on some or all the policy’s proceeds. This why it is important to consult a professional Life Insurance agent. If the policy holder made the stipulation that the death benefit should not be paid out upon their death, but instead held by the life insurance company for a period of time, the beneficiary may need to pay taxes on the interest generated during that period. If the death benefit is paid to an estate, then the person or persons that inherit the estate may be required to pay taxes on it. Always consult a professional Life Insurance agent in regard to the proceeds of your death benefit.