Do I need to claim income from a lumpsum life insurance payout? I received a 1099-R.

Yes, you are required to pay tax on the lump sum payout of your life insurance.  You should be able to check with them for any premiums you may have paid with after tax dollars. 

Details: If you cash in a life insurance policy you may have taxable income. The taxable income would be -

• the cash surrender value that you received (including any amount not received due to a loan on the policy), minus
• premiums paid over the life of the policy. On a mutual policy, premiums are net of participating dividends.

Generally, this only results in income on older policies. Your insurance company should send you a Form 1099-R for the income to report. 

There should not be a penalty so you can say the full amount is a RMD to make sure it doesn't calculate that.