Q: My spouse died and wanted to know if life insurance policies are taxable. Also, should I take a lump sum for deposit
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A: If the insured was also the owner of the policy, then the proceeds are includable in the decedent's estate for estate tax purposes. The proceeds are not taxable income to the beneficiaries. Whether you should take a lump sum or some other payment method is a question for your financial advisor, not a legal question.
Terrence H Thorgaard agrees with this answer
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