Insurance Benefits Taxable to Adult Children

Q. Are life insurance benefits taxable to adult children?

A. Overall, the face amount of a life insurance death benefit is not subject to federal income taxes by the recipient. This is true regardless of whether the recipient is an adult child of the insured or anyone else. However, these benefits could be subject to estate tax or inheritance tax, depending upon where the recipient lives, as well as on the size of the decedent’s estate.

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