Are Premiums Tax Deductible?
In most cases, no. You can’t deduct premiums you pay on life insurance policies or annuities you own. (But see Deductible Premiums for Retirement Plans in Chapter 7.) The reasons have to do with historical principles that were developed before there were tax-advantaged retirement plans and life insurance policies. There’s an argument that if employers couldn’t get a tax deduction for providing group term life insurance coverage to employees, it shouldn’t be allowed for individual coverage either.
Can I Buy My Child’s Policy?
In most cases, children will be covered on their parents’ life insurance policy. This can be a blessing and a curse. You’ll want to make sure that you weigh your options carefully before deciding whether or not to purchase a policy for your child. After all, life insurance is an important financial decision, and it’s one that should be thoughtfully considered by everyone involved.