Is the death benefit taxed?


The death benefit is not usually taxed under normal circumstances. If you're doing something less common like selling the policy to a third party, or distributing the death benefits in installments while the principal earns interest, there might be tax penalties for the beneficiary. There may also be estate taxes if the death benefit is included in an estate instead of paid directly to the beneficiary. Be sure to check with an accountant or financial advisor to make sure.