When Is Life Insurance Part Of An Estate? 
Life insurance benefits are income tax free , but they can be included in the calculation of your taxable estate for estate tax purposes.The life insurance proceed amount is included in your gross estate if the proceeds are paid to the estate - this can happen if the named beneficiaries predecease the insured or if the estate is named the beneficiary directly . A life insurance trust can help keep the proceeds out of the calculation of the estate - the trust would become the owner and beneficiary of the policy and control how the monies are paid out . 