How To Report Life Insurance Proceeds? 
The wording suggests the question concerns income tax reporting . Life insurance death benefit proceeds are usually exempt from income tax . There are exceptions . In some cases where a policy is owned by the insured 's employer , the proceeds may be taxable income . The proceeds may also be taxable if the policy -LRB- ordeath benefit -RRB- was sold or otherwise transferred in exchange for valuable consideration . If a policy is owned by a qualified plan , the death benefit will not be taxable when paid to the plan but would be taxable to the plan beneficiary when withdrawn . 