If a policyholder pays the first annual premium for a $50,000 life insurance policy and passes away shortly after, what does the beneficiary receive?

When a policyholder pays the first annual premium for a life insurance policy and subsequently passes away, the beneficiary is entitled to receive the face amount of the policy, which in this case is $50,000. This amount is paid out income tax-free to the beneficiary.

Life insurance proceeds are generally not considered taxable income for the beneficiary, as stipulated by the Internal Revenue Code. Thus, the full benefit amount of $50,000 will be received without any deductions for taxes. This tax-exempt nature of life insurance proceeds is a key reason why many individuals choose to purchase life insurance—to provide financial support to their beneficiaries without the burden of income taxes on the death benefit.