Does Life Insurance Payout Get Taxed? 
In most cases , life insurance proceeds are received income tax free . If the proceeds are payable due to the policy endowing -LRB- or maturing -RRB- the gain -LRB- proceeds less premium paid -RRB- may be taxable . Life insurance policies owned by an individual with proceeds payable to the estate of the owner may be subject to federal and / or state estate taxes . Proceeds payable on a viaticized life insurance policy also may be subject to income taxes . 