What is Long-Term Disability Insurance Premium?
A Long-Term Disability Insurance Premium is the cost that an individual or the policyholder pays in order to acquire coverage for long-term disability benefits. This insurance premium is required to replace the income if the insured cannot work due to a temporary illness that can extend beyond a short period. The amount varies depending on age, Health, Occupation, Elimination Period, Benefit Amount and Coverage Length.
Is Long-Term Disability Insurance Premiums Tax Deductible?
Long-Term Disability Insurance Premiums are not tax-deductible when paid after-tax dollars for an individual’s policy. If you have purchased an individual’s long-term insurance policy with your own money, you can’t deduct the premium from your taxable income while filing your federal income tax return.
Suppose you have a group disability premium plan purchased via your employer and the premiums are paid with pre-tax dollars. In that case, the premiums are not included in your taxable income. In this scenario, you will receive a tax benefit indirectly by reducing your taxable income.
Can you Deduct Long-Term Disability Insurance Premiums on Taxes?
If you have paid money for a long-term disability insurance premium with after-tax dollars, then you cannot deduct the premiums from your taxes. This is because the premiums were paid with the taxed money, so they are not considered tax-deductible expenses.
However, if you paid for the long-term disability insurance premiums with pre-tax deduction dollars, such as through a group benefits plan at work, you may be able to deduct the premiums on your taxes.
Also, See: Short-Term Disability Insurance Premium