Why Is Life Insurance A Taxable Benefit? 
If you are referring to group life insurance , the first $ 50,000 is usually not considered a taxable employee benefit . Coverage beyond $ 50,000 is taxable to the employee for the same reason most things have taxes : the government needs money . If you are referring to the benefit that is paid to a beneficiary upon the death of someone with life insurance , that benefit is not charged income tax . 