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    wepark's Avatar
    wepark Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Aug 12, 2011, 11:32 AM
    Is there an income tax on life insurance?
    Do we have to pay income tax on life insurance?
    CliffARobinson's Avatar
    CliffARobinson Posts: 1,416, Reputation: 101
    Ultra Member
    		  
    #2

    Aug 12, 2011, 12:25 PM
    In the United States, generally, proceeds from a Life Insurance policy paid out to beneficiaries are not taxable. There are, however, some exceptions. For instance, if the beneficiary is a person's estate, there might be tax implications.

    If you have a flexible-premium policy and you make a large enough premium deposit, the IRS could consider your Life Insurance product a "Modified Endowment Contract", which eliminates most tax advantages. Your insurance company should notify you of this possible outcome before actually crediting your deposit to your premium.

    Additional Life Insurance Information. (Wikipedia)
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #3

    Aug 16, 2011, 11:58 AM
    Also, certain variable and/or universal life policies CAN be taxable when the portion of the premium that is in fact investment funds and the income generated from the investments are withdrawn from the account.
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