Why tax for a life insurance 1099-R beneficiary?

[jmk2]

My relative passed and I elected a lump distribution on the life insurance payment. The 1099-R listed about a fifth of the gross distribution as 2a Taxable Amount, which I think was the profit made above the insured amount. (It's categorized as "D4" which I take to be: Death, annuity payment from non-qualified annuities that may be subject to tax under section 1411.)  I got a separate small 1099-INT.

My question: If the life insurance was in form of a non-qualified annuity, why do I owe taxes on this amount? Wasn't my father taxed on this amount during his lifetime since it was profit above the base amount?

[JotikaT2]

While you are correct in that you are not taxed on the original invested amount paid with after tax dollars, you are still liable for the tax on any earnings.  Those earnings are treated as taxable income.

Please see this link from the IRS that discusses this exact situation you are in.