How Much Tax Is Paid On Life Insurance? 
As a general rule , the Death Benefit on a life insurance policy is not taxed . That is what makes purchasing life insurance advantageous . While life insurance death benefits are generally excluded from income tax to the beneficiary , they are included as part of the estate of the deceased if the deceased was the owner of the policy at the time of death . But unless you have a large estate generally you do not have to worry about estate taxes . There may also be some rare exceptions to this but in most cases there is no tax on a lump sum payout to the beneficiary . 