Why Is Life Insurance Taxed? 
Generally speaking , Life Insurance proceeds are not subject to taxes nor are they attachable by creditors so long as the proceeds are paid to a named beneficiary . Proceeds may be subject to taxes and attachment if they end up being paid to the estate of the deceased for whatever reason . Thas it why it is very important to review these policies regularly to make sure that the intended terms and conditions are up to date . So the proceeds , if paid to a proper beneficiary , would not be taxable . However , if the beneficiary invests the proceeds , then any growth or accumulation that results would be subject to taxation . 