Taxes on Life Insurance Proceeds
Question: If my spouse dies and I get a big life insurance payout, will I be required to pay tax on the money?
Answer: No. Generally, the money received by the beneficiary of a life insurance policy is not considered taxable income, and the beneficiary does not have to pay taxes on it. There are far more important things to focus on in such trying times and, luckily, taxes on life insurance proceeds are not among them.
Read also 10 Most Common Questions About Drafting a Will.
