Generally no, if you receive the proceeds under a life insurance contract because of the death of the insured person, the benefits are not included in gross income and do not have to be reported:
Any interest you receive would be taxable and would need to be reported just like any other interest received.
If the policy was transferred to you for cash or other valuable consideration, the exclusion for the proceeds is limited to the sum of the consideration you paid, additional premiums you paid, and certain other amounts.
Life insurance may be taxed if the beneficiary is an estate or a charity. Always name an actual person as the beneficiary, and list two additional people in case the named beneficiary dies before you.
Contact us to see if you can save money on your insurance by speaking to a professional independent insurance agent at Journey Insurance.
Let us sift through the hundreds of insurance programs to find you the most competitive rates available. Let us do the paperwork while you spend your time doing something you actually enjoy!
Journey Insurance Agency * Irvine, California * 888.323.7480
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