Elizabeth is the beneficiary of an $800,000 insurance policy on her husband's life.Elizabeth can elect to receive $165,000 per year for 5 years or received the entire $800,000 in a lump sum the first year.If she elects to receive the lump sum, how much is included in income in the first year.

Question

Quizplus · Accepted Answer

Life insurance proceeds paid out because of the death of the insured are generally not taxable income. Therefore, if Elizabeth elects to receive the $800,000 in a lump sum, none of it would be included in her income for the year.

Elizabeth Is the Beneficiary of an $800,000 Insurance Policy on Her