The tax treatment of life insurance premiums can be confusing. Before determining the proper treatment, the following information must be known about the policy: the nature and the type of policy, the beneficiary, the owner and the amount of the premium and death benefit. Key Man Life Insurance Businesses often buy life insurance policies on employees that are important and valuable to the business or as part of a buy-sell agreement of a closely held business. The company is usually the owner and beneficiary of the policy and the employee is the insured. In order for the company to receive the death benefit tax-free the insurance premiums are not deductible by the business for tax purposes. Group-Term Life InsuranceGroup-term life insurance is eligible for special tax treatment. The cost of a policy that qualifies as group-term life insurance is not includible in the employee's income if the coverage does not exceed $50,000. The cost of the coverage over $50,000 (minus the amount the employee pays) is included in the employee's compensation. The solutions for the circumstances discussed can be served with term policies. There are many other forms of life insurance that can be used for estate planning and risk management and can become quite complex. In order to achieve the most tax efficient results of using life insurance, be sure to consult with a competent tax advisor. For additional questions or assistance, please contact Bethanie Pollock at Bethanie Pollock at 616-538-7100 or bpollock@gabridgeco.com. For more information about our services go to www.gabridgeco.com.