Is it tax deductible?

Posted in Key Man Life Insurance over 4 years ago, 4 replies

Is Key Man Insurance tax deductible for a business?

submitted by Beebe in Atlanta, GA

Key man insurance is typically owned by the company, with the company as the beneficiary of the policy. In most cases, this is done with an equity building whole life policy. The company can tax deduct the premiums as long as they are charged to the key man as income, and he pays income tax on it. In order to make this better for the employee, companies typically offer the cash value as a retirement benefit for the key employee if he stays at the company to retirement.

If you have further questions, you can email me at [email protected]

David J. Horsey Jr., CLTC
Clearview Insurance & Financial Services

submitted by David Horsey in Springfield, MO @ June 15, 2009 - 03:59 PM

In most every case, the premiums for key man life insurance policies should not be deducted as a business expense as the proceeds are generally payable to the company tax free. There may be exception so please consult your CPA for specific tax guidance. For more information see, keymaninsurance.net.

submitted by Michael in Pensacola Florida @ June 30, 2009 - 07:02 PM

I have a prospect who has a LLC Partnership business.
Can a partner have Key Man insurance?

and Are there any tax benefits or consequences for Key Man Term insurance to the business or business partners?

submitted by Ray Cessna in Conroe Texas 77302 @ September 06, 2012 - 12:45 PM

i want to know whether premiums paid on a key insurance policy,where the beneficiary is the company and the life insured is the director's spouse also acting as company secretary and key employee can be taxed in the hands of the employee as "income from other sources".

submitted by anil in mauritius @ January 02, 2013 - 06:02 AM

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