However, you may want to check with a professional tax advisor or financial planner to review the situation before spending any of the money you receive from a life insurance policy.
Usually, the proceeds an individual named as beneficiary receives from a life insurance policy are paid to that person free from federal income taxes.
In addition, a beneficiary may spend the money he or she receives anyway he chooses.
However, if the beneficiary of a life insurance policy is the person's estate, there may be estate taxes to pay, and there may be stipulations as to how they money can be used.