What Does Tax Lien Mean?
A tax lien is the right a government has to claim ownership of assets of a person who does not pay the taxes they owe. Tax liens are often applied to bank accounts, investment accounts, or real assets. In the context of insurance, tax liens can also apply to insurance payouts. This means that if the government has a tax lien for a certain person, and that person receives an insurance payout, the lien may be able to claim money from that payout.
Insuranceopedia Explains Tax Lien
If the government has a tax lien for your assets, then it can force you to hand them over. Just as it can force you to give it money from your bank account, it can force you to give it money from an insurance payout. This is one of the many reasons it is unwise to avoid paying taxes.