When Is Life Insurance Part Of An Estate? 
When the owner of a life insurance policy dies , and he/she is also the Insured , the proceeds of that policy are considered part of his/her estate . If the beneficiary of the policy is a spouse , that money passes to the spouse tax free . If there is no surviving spouse , the money is subject to estate taxes , but only if the value of the entire estate exceeds a certain amount . If the money is left to an ILIT -LRB- irrevocable life insurance trust -RRB- that was properly set up years before the death of the Insured , then those proceeds are not considered part of the estate . 