Page 72 - Interest Income - Individuals Handbook

Insurance

Insurance

 Life insurance proceeds paid to you as beneficiary of the
insured person are usually not taxable.

 But if you receive the proceeds in installments, you must
usually report a part of each installment payment as

interest income.
 For more information about insurance proceeds received
in installments, see Pub. 525, Taxable and Nontaxable

Income. Annuity.
 If you buy an annuity with life insurance proceeds, the

annuity payments you receive are taxed as pension and
annuity income from a nonqualified plan, not as interest
income.

 See chapter 5 for information on pension and annuity
income from nonqualified plans.

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