Thought You'd Like to See This:
Most Asked Life Insurance Tax Questions:
Things to Consider

Those considering the purchase of life insurance usually have one or more tax questions related to the transaction:

1. Can a personal income tax deduction for life insurance premiums be taken?
2. Can a business take a tax deduction for life insurance premiums?
3. Is the life insurance death benefit tax free?

What are the answers?

1. A personal income tax deduction is usually not allowed if the taxpayer is the owner or beneficiary of the insurance policy. Under limited circumstances, an individual may be able to claim (indirectly) a charitable deduction for the premium paid on a life policy.


2. A business cannot take a deduction for life insurance premiums if it is in any way an owner or beneficiary of the policy. Business owners who want to get a tax deduction for life insurance premiums usually seek to do so in one of the following ways:
• Bonus plan
• Group term life plan
• Pension plan
• One or more complex plans


3. In general, the life insurance death benefit is income tax free. However, one or more exceptions may be relevant.
• If too much premium is paid into the policy, it is no longer considered life insurance, and the death benefit is income taxable.
• If a business owned policy does not conform to special requirements, the death benefit is income taxable.
• The death benefit of a life policy may be subject to estate taxes.

You may have life insurance or financial product tax questions of your own.

We’d be glad to visit with you to help sort them out.

Please contact Tracy at 504-212-3440 or estateplanning@lawealthplan.com to set up an appointment with Todd or Chip to discuss tax planning or other matters of financial concern.