The Code excludes from gross income payments for various benefits or the fmv of benefits taxpayer receives in kind. Who should administer government benefit programs, e.g., benefits for workplace injury? Who administers benefit “programs” when they are the product of exclusions from gross income?
A bit about insurance
The basic idea of insurance, of course, is that individual persons purchase a policy that promises payment upon materialization of a specified risk. The policy is effective for a certain period, e.g., one year. The insurance company pools the premiums, and pays those for whom the risk materializes. Notice that policy-holders pay their premiums from after-tax money. We could treat the “winner” as if s/he has simply received a gift from those who contributed to the pool of money. Under such a rationale, the proceeds would be excluded from gross income by § 102.