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What are Life Insurance Premiums?
A Life Insurance Premium is the standard payment that you make to an insurance company in transferring for the coverage which is provided by the life insurance policy. However, it is the cost of buying the life insurance premium for yourself or for your family.
When you buy a life insurance policy you enter into a contract with the insurance company. In exchange for your premiums the insurance company promises to pay out a death benefit to your appropriated beneficiaries upon your death and as long as the policy is in motion at the time of your passing.
Are Life Insurance Premiums Tax Deductible?
The below scenarios are where life insurance premiums get deductible:
- Business-Related: If you’re owing business and pay life insurance premium for your employees as part of the benefit packages, you may be able to subtract these premiums as business expenses.
- Self-Employed Individuals: Self-employed individuals may be able to subtract life insurance premiums as business expenses if the policy is taken out to protect the business or is used as auxiliary for business loan.
- Estate Outlining Process: When it comes to estate planning, life insurance premium are paid for poilcies which are the part of estate planning strategy may get deductible.
- Charity: If you pick up a charitable organiztion as the recipient of your life insurance policy, premium you pay for that particular policy may be tax-deductible as a charitable contribution.
Can you Deduct Life Insurance Premiums?
No, Life Insurance Premiums are not deducted. Life insurance premiums for individual personal coverage are considered a personal amount and they cannot get deducted and the premium which are paid for individuals policy are not eligible for tax dedcution on your federal income tax return.
As the tax and law policies changes and individual’s circumstances vary, it is crucial to consult a tax professional to determine whether you can subtract life premiums in a certain situation based upon the tax regulations.
Also, See: Dental Insurance Premium
