Final answer:
Death benefits payable to a beneficiary under a life insurance policy are generally exempt from income taxation by the Federal Government.
Step-by-step explanation:
Death benefits payable to a beneficiary under a life insurance policy are generally exempt from income taxation by the Federal Government. Life insurance proceeds are considered non-taxable because they are considered a death benefit and not income. This means that the beneficiary of a life insurance policy does not have to pay taxes on the amount received.