Thursday, October 15, 2015

Proceeds of a Life Insurance Contract

By Joan Cripe Skrzyniarz

One of the most common questions that I am asked when I administer an estate of a decedent is: “Are proceeds paid under a life insurance contract taxable and do I report this as income?”

Answer: Generally, if you receive the proceeds under a life insurance contract as a beneficiary due to the death of the insured person, the benefits are not includable in gross income and do not have to be reported by the beneficiary. By way of example, if your father named you as a beneficiary of his life insurance policy with a death benefit of $250,000 and he passes away, you may receive the $250,000 without reporting it as income.

For further information, contact Joan Skrzyniarz in our Troy, Mich. office at 248-433-7521.