Some 4 per cent of families pay inheritance tax, but receipts have soared because frozen thresholds and the property price boom are catching more bereaved people in the net - see the box on the right.

Example: Imagine you have a $500,000 permanent life insurance policy, and you borrow $10,000 to cover a medical expense. If you repay this $10,000 loan, along with any interest, your policy’s ...

One of the common questions surrounding life insurance is whether beneficiaries have to pay taxes on the death benefit they receive. In general, life insurance proceeds are not subject to income tax.

No, beneficiaries generally do not pay taxes on payouts from term, whole or universal life insurance policies. There are some cases, though, in which the benefit proceeds are taxable.

Any payout is also protected from estate taxes, even if the insured's estate and death benefit exceed the exemption. (Currently, a 40% federal estate tax applies to estates exceeding $13.61 million).

Your life insurance policy may deny your death benefit by excluding specific activities or situations, such as suicide, ...

The tax benefits of life insurance — and the risks to consider By Tobias Salinger March 03, 2025, 4:09 p.m. EST 3 Min Read ...

The IRS disagreed – it reasoned that the $3 million payout should be included in Crown's valuation when calculating Michael's estate tax, even considering the obligation to redeem the shares.