Does Estate Include Life Insurance? 
Yes , your estate does include life insurance . While you are alive , it just includes the cash value available in your policy or policies . After death , the life insurance proceeds paid out to beneficiaries are included in the value of the estate . If a spouse is alive , there will not be any estate tax consequences . It is when the surviving spouse dies that the life insurance proceeds on that spouse can a taxable event -LRB- or if the first spouse to die left insurance money to the second to die , and those proceeds had not been spent or distributed when the second spouse died -RRB- . 