Generally, life insurance death benefits that are paid out to a beneficiary in lump sum are not included as income to the recipient. You should discuss your particular situation further with your tax preparer or a tax attonerey
Usually life insurance proceeds are not taxable to the recipient. The estate may have taxes to pay on the life insurance, but it depends upon the policy ownership and size of the estate.
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Typically, a beneficiary of life insurance proceeds does not have to pay income tax on the amount received. If you have further questions, contact a CPA or tax professional.
I agree with the earlier answers concerning taxes. While I do not know your situation, I would also recommend that you open a separate account for these funds. Do not mix any other funds in the account. Use these funds as a last resort. Once you use any funds from the account, do not replenish the account. Try to keep track of where the funds are spent, particularly for larger expenditures such as homes, home improvements, vehicles. Consultation with a financial planner or non-profit financial counseling agency is also advised.
The scope of this space does not afford an opportunity to adequately advise you. The response provided is intended to be informative, but not final. You are advised to arrange a consultation at which all facts and documents can be explored and terms for representation agreed. An attorney-client relationship must be formally established.
If you were the beneficiary, there would be no income tax, however, if benefits went to the estate, there would be estate tax.