The cash surrender value of a life insurance policy is sometimes taxable (if the owner cashes it in while they are alive), but the death benefit to the beneficiary is never taxable.
(Having said that, I will describe an unusual situation that happened in my family. My father in law owned several small insurance policies that his widow didn't know about. When she finally found out, the company had converted the death benefit to company stock--I don't know how or why. When the widow sold the stock, there was a small capital gain because the stock had increased in value after his death, and that capital gain was taxable even though the main benefit was not. So there is always the possibility of an odd situation here or there. But in the main, a cash death benefit paid to the beneficiary after the policyholder's death is never taxable to the beneficiary.)
