Do beneficiaries pay tax on life insurance?

on Jan 12, 2023 03:43:PM

According to the old Benjamin Franklin quote, "nothing is certain except death and taxes." But when dealing with a significant loss, the last thing you want to worry about is writing a check to the IRS.

Luckily, you shouldn't need to. In most cases, the beneficiaries (the people who receive the payout from a life insurance plan) do not pay income tax on the money. It also means you don't need to factor in extra to cover a tax bill when calculating the value of the life insurance you should buy.

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