Question: I received a death benefit from my parent’s life insurance policy. Are these insurance proceeds taxable to me?
Generally, life insurance proceeds you receive because of the death of the insured person aren't 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 Life Insurance Proceeds under Miscellaneous Income in Publication 525, Taxable and Nontaxable Income, for additional information.
Category: IRS Procedures
Subcategory: For Caregivers