Posted by JT-IN on January 24, 2002 at 17:48:22:
As a (former) Financial Advisor, I am a bit rusty on some of these rulings…
With that in mind, it is not likely that you could both deduct the premium, assuming we are talking term insurance here, and collect the benefits tax free. You may be able to deduct the premium, if the purpose of the benefit is key-man insurance, however the corp. is then the owner and beneficiary of the policy. If you are talking about a way to provide death benefit to your family, then you are much better served to pay the premuim from personal funds, and then any benefits are tax free; (from income tax, but may be taxable in estate taxes).
For a corp that employs 10 or more ppl, there are benfits in cafeteria plans, where some term life benefit can be paid with before tax dollars, and any benefits rec’d are still tax free.
Much abuse exists in this area, with dedcutions for many premiums paid, but the risk of paying taxes on benefits from deducted premiums, is too high a risk, IMHO.
Just the way that I view things…