Is Life Insurance Tax Deductible? Everything You Need to Know

Is Life Insurance Tax Deductible in 2023?

Everyone has various types of insurance to protect themselves or things. Certain insurances can be tax deductible, but which insurances are they exactly? We’ll give you the answer as to which insurance is tax deductible.

Whether liability, legal protection, accident, health insurance or insurance for old-age provision – the list is usually long. As the name suggests, insurance serves to protect citizens. But can these precautionary measures also be deducted from tax? Many have certainly asked themselves this question.

Table of Contents

  • Deduct insurance in the tax return
  • Insurance for old-age provision
  • Accidental death Insurance as business expenses
  • Insurance as pension expenses (special expenses)
  • Other insurance

Deduct insurance in the tax return

Many insurances can be claimed as special expenses, but unfortunately not all. Basically, one can say: if the damage that directly affects people is insured, this is usually possible. Not, however, if only things are to be secured.

Example: Liability insurance is deductible, but household contents insurance, which covers items, is unfortunately not.

Insurance for old-age provision

In any case, you should claim the following insurances relating to an old-age provision in your income tax return:

Here the upper limit is $2,300 per person
All insurances that otherwise serve your retirement provision (basic pension, private pension insurance, etc.). For 2020 there is an upper limit of a maximum of $29,000 for single people, 90% of which can be applied. For spouses assessed together, double the amount applies.

Health insurance

You can claim the costs for the basic tariff of your health and long-term care insurance in full against pension expenses.

The tax office only deducts a flat rate of 4% for sick pay. There is a maximum limit of $2,200, double the amount for spouses who are assessed together.

Insurance as business expenses

If the Guaranteed issue life insurance risks, you can deduct them as income-related expenses. There is no upper limit and you can deduct the full amount from tax. After reaching the flat rate for advertising expenses of $1,300, every single dollar has a tax-reducing effect.

Insurance as pension expenses (special expenses)

Most insurances can be deducted as pension expenses as part of the special expenses – but only up to a maximum amount of $2,200. You will quickly approach this limit value, as the contributions to statutory health, unemployment and long-term care insurance are also included here.

A different maximum amount of $3,500 applies to the self-employed. In the case of married people, these amounts double.

Learn More: Is Life Insurance Taxable for Beneficiaries?

Other insurance

If you have not yet reached the maximum limit with your health insurance, you can still take out additional insurance. Unfortunately, however, all insurance premiums are added together and only taken into account for tax purposes up to the upper limit of $2,200 for employees or $4,400 for spouses.

The following other insurances are deductible:

  • Unemployment insurance
  • Liability insurance
  • Term life insurance
  • Accident insurance
  • care insurance
  • Health insurance, daily sickness allowance and daily hospital
  • Allowance insurance
  • Work and disability insurance
  • Legal protection insurance
  • Life insurance

Tip: Since the maximum limit is very low and is usually exhausted very quickly, you should make sure that you can establish a professional connection with your insurance company. Because then you can possibly claim these as advertising expenses. An example of this could be legal protection insurance, which also includes labor law for you.