How Much Tax Is Taken Out Of Life Insurance? 
It 's going to depend on the situation and what you 're doing to the policy . Normally the only tax involved in most life insurance policies is the taxes you paid on the premium dollars you used to buy insurance . This is the same thing for the money you spend on groceries or to pay bills . Your normal payroll taxes . The death benefit of most all life policies are also free from taxes . There are going to be certain situations where taxes may be involved but they are rare . 