skip navigation

Search Help
Navigation Help

Topic Index
ABCDEFGHI
JKLMNOPQR
STUVWXYZ#

FAQs
Forms
Publications
Tax Topics

Comments
About Tax Map

IRS.gov Website

Frequently Asked Tax Questions

Interest/Dividends/Other Types of Income - Life Insurance & Disability Insurance Proceeds

  1. Are proceeds paid under a life insurance contract taxable and do they have to be reported as income?
  2. I am receiving long-term disability. Is it considered taxable?

Rev. date: 1/1/2011

Are proceeds paid under a life insurance contract taxable and do they have to be reported as income?

Generally, if you receive the proceeds under a life insurance contract because of the death of the insured person, the benefits are not includable in gross income and do not have to be reported:

Rev. date: 1/1/2011

I am receiving long-term disability. Is it considered taxable?

You must report as income any amount you receive for your disability through an accident or health insurance plan paid for by your employer:
Amounts you receive from your employer while you are sick or injured are part of your salary or wages.
Payments you receive from qualified long-term care insurance contracts will generally be excluded from income as reimbursement of medical expenses received for personal injury or sickness under an accident and health insurance contract. Also, certain payments received under a life insurance contract on the life of a terminally or chronically ill individual (accelerated death benefits) can be excluded from income. Refer to Publication 907, Tax Highlights for Persons with Disabilities.
You may be able to deduct your out-of-pocket expenses for medical care above any reimbursements, if you are eligible to itemize your deductions. You will need to review Publication 502, Medical and Dental Expenses.
For more information, refer to Publication 907, Tax Highlights for Persons with Disabilities.