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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.



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