This article will spine on elaborating whether insurance premiums are tax-deductible or not.
I have received lots of emails from people who care to know whether insurance premiums are deductible and whether they may get a tax break for Life, health, or disability insurance.
On this note, I will make an exposition on the subject matter as we get along, kindly stay clued and read to the last.
When you are filing your taxes, you may ponder whether “there is a simple YES OR NO answer to whether insurance premiums are tax-deductible?”
The truth is, there ain’t a 1-word answer to this. Perhaps, the most used two-worded answer is “probably Not”.
Your insurance company’s or your tax situation may contribute to whether your insurance premium is tax-deductible or not.
Life, Health and Disability insurance premiums are not tax-deductible for persons or businesses.
Until you find out whether your specific situation is an exception, the answer to whether Life, Health and Disability Insurance premiums are tax-deductible is No.
INDIVIDUAL LIFE INSURANCE
For individuals: Not usually. You may get a tax deduction if you use your life insurance policy as collateral on a loan. Ask your accountant or a tax professional if it’s possible in your situation.
For businesses: It’s the same as an individual. A corporation can deduct life insurance premiums if they’re used as collateral for a loan. Again, it’s recommended to get tax advice for this.
GROUP TERM LIFE INSURANCE
For individuals: No. Your employer generally pays these premiums and it’s considered taxable income for their employees.
For businesses: Does your business pay the premiums for your employees? If yes, these premiums are tax deductible as long as they’re a reasonable business expense.