Typically, what you pay for life insurance premiums is not deductible on any tax return. But when you die, the payout of that policy is not taxable or reportable on any tax return. Exceptions do apply. For example, in some scenarios if the life insurance premiums are tax deductible, then any payout on the policy after you die is taxable to someone; usually the beneficiary recipient. This type of setup is just not all that common though.