Published 08/13/2012 08:22 AM |
Updated 08/13/2012 10:23 AM
Are SGLI Proceeds Taxable?
In general, all VA benefits are exempt from taxation. SGLI proceeds that are payable at the death of the insured are excluded from gross income for tax purposes. (The value of the proceeds, however, may be included in determining the value of an estate and that estate may ultimately be subject to tax.) If SGLI proceeds are paid to your beneficiary in 36 equal monthly payments, the interest portion included in these payments is also exempt from taxation. In addition, delayed settlement interest (interest accrued from the date of the insured's death to the date of settlement) is also exempt from taxation. You are not required to report to the Internal Revenue Service (IRS) any installment interest or delayed settlement interest that you received in addition to the proceeds.