How Are Life Insurance Death Proceeds Taxed? 
Life insurance proceeds are tax as follows , generally . Nothing is simple about taxes , so you should consult your tax attorney for specific cases . 1 . Life insurance is generally not charged income tax if the beneficiary is not the estate . 2 . Life insurance proceeds are considered part of the estate for state and federal estate tax purposes . This is if the deceased had incidences of ownership in the policy and there was no remaining spouse . 