Should Life Insurance be taxed?

Question

please add why or why not

Answer 1

Poor Robbie keeps getting the thumbs down.

He's correct, a few states charge premium tax to the consumer at sale (like KY), most insurers pay premium tax as a back office function and turn it over it to the states it was collected in. Every state get a piece of the insurance premium pie.

Since it's the states job to regulate the insurers, I'm OK with that as long as they make it a small piece so it's not an undo burden to the policyholders or try to balance the states budget with premium tax like Florida.  

Now if  the question is really about should death benefits be taxed, then I'd say no: the premiums were paid with after tax money, the death benefit shouldn't be taxed. Having a tax free death benefit adds to the public good and encourages purchasing of life insurance.

Answer 2

OH, sheesh.  Just what we need, another tax to give the politicians more money to vote themselves more benefits.

No.   Taxes are high enough.

Answer 3

Life insurance is taxed.  It's collected with the premium.

Why did someone give me 2 "thumbs down"???  I am right in my answer - I know because I sell it for a living.

Answer 4

The taxes are included in the premium. Therefore, in most situations, the payout is not taxed.

It all depends on the type of life policy, how much it was funded, and how the beneficiary plans on taking the money out.