Andy has lived in Bismarck, North Dakota most of his life. He called me to ask: “Do you pay taxes on money you receive from a parents life insurance policy.”

Bismarck, is the capital of the state of North Dakota. Bismarck sits on the Missouri Plateau directly across the Missouri River. The North Dakota State Capital, the tallest building in the state, towers over the central part of Bismarck. Bismarck has a large park system and an extensive network of exercise trails, it is also home to five golf courses. Hunting and fishing are also common activities in the area.

Andy, in answer to your question, generally speaking, life insurance proceeds (death benefits) are received income tax free by policy beneficiaries.

Any subsequent monies that are earned through investment of those proceeds, unless specifically invested in tax-free investments, would be subject to state and federal income taxes.