Yes, and no. Typically it is tax free in the hands of the beneficiary but because it is a deemed asset in the estate in terms of paragraph 3 (3) (a) of the Estate Duty Act of South Africa it will attract estate duty (a form of tax) at a current rate of 20 or 25% depending on the value of the overall estate.
There are structuring opportunities to legitimately make the proceeds from such a policy more tax efficient.