Typically, the mention of transfers of life insurance policies in an estate planning context raises questions of whether the proceeds are (or will be) subject to federal estate tax1 or state inheritance or state estate tax, how insurance policies are handled in a trust or otherwise where the decedent-insured possessed fiduciary powers over the policy,2 or the treatment of split-dollar policies.3 However, the transfers of policies during life can encounter significant tax consequences as well. Those potential tax consequences are the focus of this article.