Generally, final expense insurance benefits are tax free for the beneficiaries, as long as they are paid directly to them and not to the estate of the deceased. However, there may be some exceptions or limitations depending on the state laws and the policy terms. For example, if the beneficiary is not a relative or a spouse of the deceased, they may have to pay inheritance tax on the benefits. Also, if the policy has a cash value component that accumulates interest, that interest may be taxable. Therefore, it is advisable to consult a tax professional before purchasing or receiving a final expense insurance policy.