Is it worked for income if I’m using money from a life insurance policy from a passing family member to pay for more than half of my living expenses?

Money received from a Life Insurance Policy is not taxable and is not counted as income. 

However, I think you may be asking a different question.  If your question is related to DEPENDENCY,  it does not matter where the money comes from.  The issue is how much did you spend as opposed to the other person.