Now I'm just wondering when I die I'm spliting the $500,000 between 2 people so will each get $250,000 or do they tax it and they only get around $220,000?
The vast majority of the time, that money is not taxable, as long as it's paid to the beneficiaries, and doesn't go to your estate. That is as long as you name a person or people and not put the "estate" as beneficiary.
Then, there is usually no federal income tax paid on the proceeds from the life insurance policy. Here's an article explaining more about life insurance tax and how it works.
Or course, you may want to discuss the tax effect of life insurance proceeds with your tax person or financial planner for a clear understanding of how it works.