Generally no. Under IRC §264(a)(1), life-insurance premiums are not deductible whenever the business is directly or indirectly a beneficiary of the policy. That covers the two most common cases:
- Key-person insurance (business insures an owner/key employee and is the beneficiary) — not deductible.
- Entity-purchase buy-sell (company owns and funds the policy) — not deductible. A cross-purchase buy-sell is paid personally, also not deductible.
- Personal life insurance paid from the business account — not deductible; code it as an owner draw/distribution, not an expense.
The one real exception: group-term life insurance for employees where the business is not a beneficiary is deductible by the employer as compensation under §79/§162. The first $50,000 of coverage is tax-free to the employee; coverage above $50,000 creates imputed income under the Table I rates (Treas. Reg. §1.79-3; see IRS Pub 15-B).
Why the rule exists: the death benefit is generally received income-tax-free under §101(a), and you can't deduct the cost of producing a tax-free receipt.
Two traps:
- §101(j) / Form 8925 — for employer-owned life insurance, the death-benefit exclusion is limited to premiums paid unless the notice-and-consent requirements were met before issuance and Form 8925 is filed. Miss it and the benefit can become taxable above premiums paid.
- >2% S-corp shareholders — under §1372 they're treated as partners for fringe-benefit purposes, so the §79 exclusion doesn't apply; premiums for them are generally treated as wages.
If you've been deducting premiums that §264 disallows, it's usually a bookkeeping reclassification (to an owner distribution); whether to amend prior returns is a professional's call.
Full guide: Is Life Insurance Tax Deductible for Business Owners?. This is tax-treatment information, not insurance advice. Estimates — confirm with your tax professional.