So my aunt passed away a few months ago unfortunately and I was just informed that my brother and I were listed on her life insurance policy. I’ve never been the beneficiary on someone’s life insurance policy and I’m unsure how it all works. Do I get taxed on this money when I receive it? Also I know most life insurance policies at a workplace are 2 times the annual salary so should I expect to get half of that amount or does it not work like that?
There’s no taxes on life insurance benefits.
If the insured dies, you get money. Simple as that
You can purchase a life insurance policy for basically any amount (within reasonable limits typically based on income). Can’t really tell you how much to expect. All depends on what your aunt was thinking about accomplishing with the life insurance.
The money is not taxble. How much you receive will depend on the value of the policy and what percentage your aunt designated you to receive.
This is not taxable income *unless* her employer was paying the premiums, which is fairly uncommon.
The insurer will need a certified copy of the death certificate.
The insurer may just cut you a check, or (more commonly today) they will offer to set up some sort of demand deposit account that you can write checks against. Don’t do that – you can insist that they cut you a check for the full amount you have coming to you. The reason is that the “checking account” they are offering has no protections – no FDIC insurance, it isn’t even a “real” bank account, you’re just a creditor on their balance sheet.
Once you get the check deposit it to your bank; if it’s large enough you might consider depositing it into a completely different financial institution. Expect a hold to be placed on the funds for a short period.
No tax.
You’ll get 50% of the death benefit. The insurance company might put the money in an interest bearing savings account for you, but u can immediately transfer it out
In general, death benefit payouts are not taxable as income. There are a few exceptions, talk to your accountant if you apply.
If this was only a workplace policy the short answer is it depends.
You need to contact the HR department of the company where Aunt worked, explain that you are a life insurance beneficiary, and who should you talk to. The amount of insurance is up to the company and if your aunt bought extra. Ultimately you will be dealing with the the insurer and they will tell you the process.
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