Life insurance has actually grown in complexity over the years and, as a result, life insurance tax issues have actually ended up being similarly complex. While you need to consult with a tax professional to validate the tax status of any life insurance coverage payout you get, we can offer you some general guidelines and guidelines to think about.

- Pre-Tax or Post-Tax Cash— Much of the tax status of the payout for a policy depends upon whether premiums were paid with pre-tax or post-tax dollars. Always keep in mind that, someplace along the cash path, the taxman takes a cut. Almost anything you get that is non-taxable ways you or somebody else currently paid the tax on those funds.
The vast bulk of policies, either worker or employer-purchased, are purchased with after-tax dollars. Because case, recipients do not have to state the death benefits as earnings and receive the advantages tax-free.
If the policy was bought with pre-tax funds– for example, as p.
