The insurance company is going to write the check to whoever is named the beneficiary on the policy. Nothing you can do can stop that.I only found that out after I asked for help. My brother who is a lawyer finally got back to me. He told me that he completed the paperwork for a couple of his insurance policies, in addition, I received another insurance claim form.
This form said that the funds would be reported as taxable. Considering the amount of money involved in this policy alone ~2X the $ of my first house. I was looking to see if I could drop it into a trust, and pay the taxes when it was disbursed.
There is a confusion in terminology. A life insurance company wrote the policy, but it's not an insurance policy. From what you are saying, it's a deferred income annuity, which is taxable to the beneficiary. There probably is not much you can do to avoid the tax hit, except incur some offsetting deductible expenses. Maybe there's a Vegas trip in your future you don't know about.
You should at least consult with a tax attorney, or a really good CPA for peace of mind. You don't have a estate problem, so no need to go in that direction. At least you can develop a tax strategy for what's left over.
FWIW, and don't take this personally. but you are seeing why most financial advisers advise that annuities only benefit the insurance company. I say that with the knowledge that my father was able to successfully use an lump sum pension payout to fund an annuity that supported my mother for years, because of the age difference in the two. Outside of special circumstances such as that, annuities are terrible investments. (IMO, i am not giving investment advice.)