Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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Life Insurance Tax DeductionYou can deduct life insurance premiums as a business expense only if it is an actual business expense. This means that it is a policy that covers your employees and does not list you or your business as a beneficiary.

There are two IRS rules made specifically about deducting life insurance premiums as a business expense. For policies issued before June 9, 1997, the premiums aren’t deductible for anyone (including yourself) who has a financial interest in your business.

For policies issued after that date, you cannot deduct the premiums for any policy that name you a beneficiary irregardless of who or what the policy covers, including policies covering family members.

So, if you pay life insurance premiums for employees on policies in which you or the business is not named a beneficiary, then you can probably deduct those as business expenses.

This may depend on the kind of business you have and you will want to check with your tax professional. There have been many rules put into place because the IRS discovered some ways in which companies and businesses have tried to avoid paying taxes; so you will want to make sure that everything is done above board.

To compare business life insurance rates along with regular life insurance rates just enter your zip above for a free insurance rate comparison!

Life Insurance for Business and Insurable Interest

It is not uncommon for businesses to take out life insurance policies on their CEO’s and higher-ups and name themselves as the beneficiaries of those policies.

This is because of the concept of insurable interest which refers to the concept that the thing (such as a house) or person that someone insures is far more valuable than the monetary benefit of the policy. This concept applies to anyone or anything insuring something or being insured, and not just businesses.

There are strict laws regarding which family members have actual insurable interest in other family members, for example, and restrict who can take life insurance policies out on someone else that name them as beneficiaries.

The idea of insurable interest has a long history that goes back hundreds of years when the insurance industry was looked at more as a way to gamble, with people taking out policies on people and things that they had no actual investment or interest in (taking out policies on famous people, for example).

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Heads of companies are hugely important to those companies and the loss of them can be devastating to the daily operation of the businesses, so it is easy to see why a company should have policies for those individuals that name the business as the beneficiary.

There have, however, been a few shady cases involving businesses and life insurance policies, such as a few instances where companies were found to have taken life insurance policies out on low level employees without the employees’ consents, and were taking tax breaks for taking out such policies.

Neither these employees nor their families ever knew these policies existed until someone died and family members found out there was a life insurance policy they were not the beneficiaries of. In these cases it was harder to more accurately determine what the insurable interest was, and the families won in many of the lawsuits in such cases.

Now, that refers primarily the process of corporations purchasing life insurance policies on employees in general. In instances where the instance already seems kind of shady, it seems obvious why also deducting the premiums as business expenses when the business is named as the beneficiary is not allowed.

You can absolutely deduct other types of insurance, however, like health insurance premiums you pay for employees, as well as fire, theft and flood insurance, and worker’s compensation insurance in addition to several other business insurances. You can also usually deduct health insurance premiums paid for partners. If you are self-employed, you can deduct health insurance on policies that cover you or members of your family.

And if you pay life insurance policies on the behalf of your employees that name their families or someone else (anyone else other than you or your business) then you can deduct those premium payments as expenses as you would their health insurance premiums, because those are costs that do not directly benefit you in any way (other than keeping your employees happy, which seems perfectly legal).

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Finding the Best Business Life Insurance Rates

The IRS has clear rules about what kinds of insurance you can and cannot deduct as business expenses. Check with the IRS for a complete list of these guidelines regarding deductions, as well as your tax professional if you have questions about what pertains to you and your specific case. To obtain life insurance for yourself or your business start with the free life insurance quote tool on this page.