Is Life Insurance Settlement Taxable Income? 
The settlement when made to an individual does not constitute a taxable event . When the proceeds are paid to anyone else it could be taxed . This income tax free feature can be crucial in planning your estate . For example , if you can identify your eleven grandchildren and purchase a single premium whole life policy on yourself naming them as beneficiary , you can take care of their needs in your estate without triggering any income tax consequences . 