Generally, life insurance payouts are not taxable. There may, however, be some types of investment vehicles that are branded as life insurance but which have some tax consequences. You would need to ask the company to know for sure (although this is uncommon).
If you give money to anyone other than a spouse, you must file a gift tax return if the amount of the gift is more than $15,000 per person per year. However, no tax is actually owed unless your lifetime total of gifts is more than $11 million. The gift tax return is used to track your gifts against your lifetime total. The gift tax return is filed separately--it is not part of your regular tax return and Turbotax does not include it.
