Life nsurance proceeds Paid by reason of death, generally non taxable Policy matures or is surrendered, the excess of proceeds over the premiums paid is taxable to recipient Dividends on lie insurance and endowment policies are normally non taxable because they are considered return of premiums paidLife Insurance Proceeds • Paid by reason of death, generally nontaxable • Policy matures or is surrendered, the excess of proceeds over the premiums paid is taxable to recipient • Dividends on life insurance and endowment policies are normally nontaxable because they are considered return of premiums paid