Another question for the Doper accountants…
I am the benificiary of some life insurance policies and I’m wondering what, if any, taxes I’ll have to pay when I collect.
Also, any advice on what would be the best method of investing the money. The amount will be in the neighborhood of $250,000, if that makes any difference.
Life Insurance is generally non-taxable.
Life insurance proceeds, which were paid to you because of the insured person’s death, are generally not taxable unless the policy was turned over to you for a price.
http://www.irs.gov/uac/Taxable-or-Non-Taxable-Income%3F-1
Mind you, killing the person to collect can lead to other issues. 
Thanks for the info! 
Do be aware that life insurance payouts often include a taxable portion for interest. The bank calculates the time from the date of death (or date of the claim?) to the point where they actually cut the check. I’ve seen people earn as much as $1,500 of interest this way, though usually the amount is quite a bit smaller.