Yes, life insurance death benefits are paid tax free to the beneficiary of the life insurance policy.
If there are estate taxes due (right now, federal estate taxes are charged on the excess if an estate is larger than $5,250,000), someone will have to pay them, so the beneficiary of a life insurance policy may be asked to pay a portion of those estate taxes.
Also, if the beneficiary takes the death benefit on a payment plan, for example, receiving monthly or annual payments instead of one lump sum, they will be paid interest on the money not yet collected, and need to pay taxes on the interest from the death benefit.
However, in most situations, the beneficiary of a life insurance policy receives the death benefit 100% tax free.
If there are estate taxes due (right now, federal estate taxes are charged on the excess if an estate is larger than $5,250,000), someone will have to pay them, so the beneficiary of a life insurance policy may be asked to pay a portion of those estate taxes.
Also, if the beneficiary takes the death benefit on a payment plan, for example, receiving monthly or annual payments instead of one lump sum, they will be paid interest on the money not yet collected, and need to pay taxes on the interest from the death benefit.
However, in most situations, the beneficiary of a life insurance policy receives the death benefit 100% tax free.
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