What Are The Tax Implications Of Life Insurance? 
Life insurance is generally passed to a beneficiary income tax free . If the policy is left to the Estate , or if no beneficiaries listed on the policy are still alive -LRB- and the proceeds go to the estate by default -RRB- , then income tax will be charged . If the policy 's death benefit is over the exempted amount for state and/or federal estate taxes , those will also apply . 