Are Life Insurance Proceeds Taxable In West Virginia? 
Life insurance proceeds are taxable if they are left to the estate of the policy owner . However , if the beneficiary is a person , that person receives the life insurance benefit income tax free . If they decide to take it on payments , only the interest is taxed . Federal estate taxes will be charged if the estate -LRB- including life insurance proceeds -RRB- exceeds $ 5,250,000 in 2013 . West Virginia does not have a state estate tax . 