259 / Are death proceeds payable under group life insurance exempt from income tax?

Yes.

Death proceeds received by individuals are wholly tax-exempt whether received from group permanent or group term insurance.¹ Where group term life insurance coverage is provided to domestic partners of employees by an employer, death proceeds paid on the death of a domestic partner are excluded from income under IRC Section 101.² The same rules as are applicable to proceeds under individual policies generally apply ( Q 63 to Q 71). Special rules apply if insurance is payable under a qualified pension or profit sharing plan ( Q 3969, Q 3970).

1.     IRC § 101(a); Treas. Reg. § 1.101-1.