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Last Updated: March 26, 2008
Yes. Whenever one has an insurable interest in a life insurance policy, any funds received as a beneficiary are tax free. You are always considered to have an insurable interest if the insured person is a family member.
Of course, if you save or invest the money that you receive and earn interest, dividends, or capital gains as a result, the earnings on your life insurance settlement would be taxable.
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