There are a lot of things that we’re forced to spend money on and so it goes without saying that people will take any and every opportunity to recoup some of their hard earned cash. Few people would, therefore, miss out on the chance to capitalize on a tax deduction, for instance. But you don't know if you can write off your life insurance premiums?
But, while a small business owner may be able to write off some expenses, or a family may be able to get some money back for their child’s educations or care, a life insurance write off just isn’t in the cards. A common misunderstanding is that insurance premiums can be used as tax deductibles. Even if you’re a business owner and your life insurance is obviously an imperative part of ensuring the business’ long term success, you can’t claim your life insurance premiums on your taxes.
There are, however, a few exceptions to this rule. Firstly, if you decide to donate your life insurance policy to a registered charity, then your premiums can be written off. Another instance where one could claim their insurance premiums is if they use their policy as collateral to take out a loan or it is part of an RRSP. Only in these instances will insurance policy holders have the opportunity to recoup some of the money paid for their premiums.
Although a life insurance write off likely isn’t possible, the death benefit which your beneficiaries will receive in the event that you die is tax-free.
Even if there’s no way for you to take advantage of a life insurance write off, there are other things you can easily claim against your taxes. Besides, when it’s something as important as life insurance, the coverage your loved ones will receive if and when you die far outweighs the chance to reclaim some of your premium dollars.