Are Federal Employees’ Group Life Insurance death benefits taxable?
Death benefit payments made under FEGLI to a designated beneficiary are not taxable as income to the beneficiary. As with any life insurance policy in which the decedent had maintained incidents of ownership (the right to change the beneficiary), the proceeds are includible in the insured’s estate and may be subject to estate tax to the extent the estate is taxable.

“Living benefits” paid under FEGLI are income tax-free.