Why Is Life Insurance A Taxable Benefit? 
Your question could go a couple of different ways . A personally owned life insurance policy is NOT taxed . The cash value can be borrowed to avoid taxation . The death benefit proceeds when paid to the beneficiary is NOT taxed either . If you are asking about taxing a life insurance benefit such as group life insurance , Peggy is correct . The face amounts under $ 50,000 are not taxed , however , amounts exceeding $ 50,000 or a certain percentage of your income can be considered taxed employee benefits . 