Insurance Proceeds Interest

Life insurance proceeds are generally exempt from tax. Taxpayers can receive life insurance benefits paid upon the death of the insured either in a lump sum or in installments. If taxpayers receive the proceeds in installments, a part of each installment payment is usually reported as interest income.

Form 1099-INT shows this portion of the proceeds in box 1.

	See Publication 525, Taxable and Nontaxable Income for more information about insurance proceeds received in installments.