Does Life Insurance Become Part Of The Estate? 
If the life insurance is personally owned , depending on the circumstances , it can be includable in the estate . But from a federal estate tax point of view , the unified credit is over 5 million for individuals , 10 million for marries couples . So even with life insurance proceeds includable , you may not exceed the unified credit . However , most individual state exemptions are considerably lower than the federal unified credit , so you need to be aware of your states exemptions . But you could consider creating an irrevocable life insurance trust -LRB- ILIT -RRB- to own the policy and eliminate the estate and state tax exposure . Consult an estate tax attorney before moving forward with any policy ownership decisions . 