Does The Beneficiary Of A Life Insurance Policy Have To Pay Taxes? 
For personally-owned policies , life insurance death benefits paid in a lump sum to the beneficiary are received income tax free - a unique and important benefit . If the beneficiary is a business and that business owned the policy , the business is generally not subject to the regular corporate federal income tax on the death proceeds provided special requirements are satisfied for policies issued or materially modified since August 17 , 2006 -RRB- . 