Question: I received a death benefit from my parent’s life insurance policy. Are these insurance proceeds taxable to me?
Generally, 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. However, interest income received as a result of life insurance proceeds is taxable.
See Publication 525, Taxable and Nontaxable Income, for additional information.
Category: IRS Procedures
Subcategory: For Caregivers