Is Keyman insurance tax deductible?

Submitted by gaptrades on Fri, 12/14/2007 - 08:05

Please is the premium paid on a Keyman Insurance tax deductable as an expense in an S-Corp enterprise. How is the procceeds taxed for S-Corps.

Posted: 18 Dec 2007 10:04 Post Subject:

Tax exemption is available for the premium paid for keyman insurance. In most cases it is treated as the business expenses and may enjoy the tax benefits accordingly.

You can enquire with your agent to find out more about the tax benefits available on the keyman insurance.

Posted: 19 Dec 2007 10:56 Post Subject:



System detected duplicate content, converted into image.

Posted: 21 Dec 2007 07:26 Post Subject: values

Hi all!

What if the key person is the owner?



I guess that is quite a choice on a number of occassions.

There is no easy formula for determining the value of a key employee


Well, neither there is an easy process to calculate the profit that the organization may have earned had the employee been with them. Yes, good planning as you have said is often the result of a good vision!

Regards,
Coco-cheer-up!

Posted: 02 Jan 2008 08:37 Post Subject:

"Guest" replied as follows to the question concerning tax deductibility on "key-PERSON" insurance (not normally referred to as "key-man" insurance anymore):

Tax exemption is available for the premium paid for keyman insurance. In most cases it is treated as the business expenses and may enjoy the tax benefits accordingly.



Unfortunately, I cannot agree with this statement. If you are referring to Key Person LIFE insurance, the death benefit in this circumstance is normally paid to the company for the loss of the key person as outlined correctly in InsInvestigator's response (great info, by the way!).

The death benefit paid is most usually in the form of a lump-sum payment, which is received by the beneficiary TAX-FREE unless certain IRS rules have been violated (not the case here). That's another case...

The premiums for this type of insurance are normally NOT tax-deductible to the business. Consider the following question: Do you think that the IRS would allow a business to receive a benefit WITHOUT PAYING ANY TAXES ON THE BENEFIT, and also allow that person to WRITE OFF the cost of those benefits?

Me no think so..... Policies that benefit the continuation of a business, such as buy-sell contracts, key person life and disability contracts, etc. are typically NOT tax-deductible.

Comments would be appreciated!

InsTeacher 8)

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