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Author: WallyJr One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75340  
Subject: Re: Book review: Missed Fortune (long) Date: 6/9/2004 9:42 PM
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Granted, if a surviving spouse receives the insurance (as well as if the policy was owned by the beneficiaries), it will also be tax free

Are you saying that life insurance proceeds are tax free only if the policy is owned by the beneficiaries?

I got this from Publication 525:

Life Insurance Proceeds
Life insurance proceeds paid to you because of
the death of the insured person are not taxable
unless the policy was turned over to you for a
price. This is true even if the proceeds were paid
under an accident or health insurance policy or
an endowment contract.

Sounds to me that if the beneficiary owns the policy then it IS taxable.


The question tax free from which tax.


If the beneficiaries own the policy, it is generally not taxable for ESTATE tax purposes in the estate of the insured.

For INCOME purposes, GENERALLY life insurance will be taxable if your only relationship to the insured is a economic one (you're not related), you bought the policy from the insured as in vitalic? ins. policy investments.

If you have an insurable interest in the insured, it is not income taxable (the insured is a close relative, mother, father, child, grand parents, employess, etc)
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