Is life insurance subject to the federal estate tax?

Although life insurance proceeds are not subject to income taxes, they are included in the gross estate subject to death taxes if either the proceeds were payable to the deceased person's estate or the deceased person, during his or her lifetime had what is referred to as "incidents of ownership" in the policy. This means that if the deceased, during his or her lifetime, paid the premiums on the policy or kept the right to change beneficiaries, the value of the policy at death will be included in the taxable estate.