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This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

Content is the opinion of the author and does not represent the position of any other person or entity. Information is from sources believed to be reliable but cannot be guaranteed.

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Business pays life insurance

originally posted: 11/22/2006  reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If you notice an error or are in doubt, please send a new question by email or ask for an update. Email

Q: I have a business loan where the bank requires me to have life insurance. I pay it as a business expense. You said that makes the benefit taxable. Can the life insurance payment be both tax deductible and tax free?

A: Life insurance proceeds are tax-free if paid to a business. A better approach is to has a person (your spouse, for example) be the owner and beneficiary of the policy and then execute a collateral assignment for the amount of the loan. Just check the "collateral assignment" box when applying online. There is no additional charge and the insurer will handle this legal paperwork as part of the policy issue. Tax treatment may depend on the amounts of insurance involved.


More resources:

OnlineAdviser life insurance service request