Is A Life Insurance Policy Pay-out Tax Free?
Posted September 30, 2009 – 10:20 am in: structured settlements FAQAn employee at our company received a life insurance pay-out when his spouse died. Does he have to pay taxes on the amount he received.
Previously I had heard that you did not have to pay taxes on a pay-out from a life insurance policy when someone in my family passed away.
Thanks
5 Comments
Life insurance pay-out on a spouse is not taxed.
I may not be of much help. Me and my husband are in the process of possibly obtaining a whole-life cash value plan (or something like that). Anyways I do remember them telling us that the cash accumulation payout from it (its like a forced savings AND a life insurance policy) or if we every cashed out the money is completely tax-free. So I think that the actual life insurance payout would also be tax free. However, I am no expert and that might be for this plan, as I don’t know what plan your employee had. Hope someone comes along with a bit more knowledge than me.
Just like every tax question, it depends.
Generally though, the amount received will be tax-free.
Life insurance proceeds are not taxable. Nor are they part of the deceased’s estate. So they don’t even show up on the tax return.
Generally it’s tax free.