Is business life insurance tax-deductible in Nevada?

Business life insurance deductibility depends on the type and structure of the policy. The general rule: if the business is also the beneficiary, premiums are not deductible. If the policy is an employee benefit where someone else benefits, deductibility may apply.

Key person insurance premiums—where the business owns the policy and is the beneficiary—are generally not deductible under IRS rules. However, death proceeds received by the business from a key person policy are also tax-free.

Executive bonus plan premiums (Section 162 bonuses) are deductible as compensation expense, since they're paid on behalf of an employee who owns the policy and pays tax on the bonus amount.

Group term life insurance provided by an employer is deductible as a business expense for the first $50,000 of coverage per employee. Benefits exceeding this threshold create taxable income for the employee.

Split-dollar arrangements have complex tax treatment and require careful legal and tax guidance.

Nevada businesses should consult with a tax advisor or CPA alongside their insurance agent to structure policies appropriately. The tax treatment of business life insurance requires coordination between legal, tax, and insurance planning. While agents in our network can explain how different structures typically work, specific tax advice should come from a qualified tax professional.