Tax Facts

69 / How are proceeds taxed if a life insurance policy is owned by someone other than the insured?

Updated: October 02, 2024 at 01:53 PM
The proceeds are taxed in the same manner as if the insured owned the policy. When a person retains all the incidents of ownership in an endowment or annuity contract but designates another to receive the maturity proceeds, the proceeds will be taxed to the owner rather than to the payee ( Q 579). For possible gift tax consequences when a policy is owned by one individual but insures another, see Q 214.

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