Does A Beneficiary Have To Pay Taxes On A Life Insurance Policy? 
Whenever the beneficiary receives the proceeds from a death claim , he will not pay taxes on that dollar amount . Example - $ 100,000 is paid to spouse , she will not pay taxes on that amount because life insurance is always a tax free benefit . My recommendation is to annuitize the benefit so that she will receive a monthly income . This way she will not be inclined to blow it all but can manage it over a long period of time . 