Is Life Insurance A Part Of An Estate? 
The proceeds from the policy are income-tax free . If you name your spouse the beneficiary to the policy , the monies would not be included in the calculation of the estate . If the beneficiary is someone else , it would be included in the calculation of the estate for tax purposes . When the insured is also the policyowner , the life insurance proceeds can become part of the estate in the event all named beneficiaries on the policy , if any , predecease the insured -LRB- and assuming it 's never updated to reflect a new named party -RRB- . A trust , such as an irrevocable life insurance trust -LRB- ILIT -RRB- , can allow the proceeds to be excluded from the taxable estate because you would no longer be the owner of the policy . The trust would be the owner and controls how the proceeds are distributed . 