Are Life Insurance Premiums Tax-Deductible?

No deduction is allowed for the premiums paid on a personally owned life insurance policy, regardless of who is the premium payer or who is the policyowner. Such outlays are considered a nondeductible personal expense. This rule applies even where the owner of the policy is someone other than the insured.

Business policyowners generally fare no better. No deduction is allowed for premiums paid on any life insurance policy if the taxpayer is directly or indirectly a beneficiary under the policy. This “all or nothing” prohibition blocks the deduction of premiums even if they would otherwise be deductible as ordinary and necessary business expenses.

Reproduced with permission.  Copyright The National Underwriter Co. Division of ALM

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