Explanation
Death benefits are often received tax-advantaged by beneficiaries, while access and policy disposition can create taxable consequences depending on structure and transaction method.
Example
A receiving a may face different tax treatment than a who surrenders a policy with gain above .
Common mistakes
A frequent error is assuming all policy proceeds are always tax-free regardless of transaction type. Tax outcomes depend on whether funds are claim proceeds, loans, withdrawals, or surrender value.
Summary
Always distinguish claim payout from living access transactions when assessing tax impact.