Is Disability Insurance Tax Deductible On Schedule C?

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   Andrew Gilmore

   Sales Supervisor, Disability Insurance Services, San Diego, CA

   This is really a great question. For individual disability plans the answer is simple: You can only deduct premium for a policy on yourself if you are the owner of a "C - Corporation." So, if you are a w-2 employee of a company, maybe even an S-corp owner, you may not deduct the premium. This might sound like a disadvantage, but let's really analyze the concept. If you were able to deduct the premium, that would mean that your monthly benefit would be subject to being taxed in the event that you collected on your policy. So conversely, if you aren't writing off the premium, the benefit amount is tax free! It is a rule of thumb in the DI industry that carriers will insure up to 60% of your income. A tax free benefit allows you to maintain a semblance of your lifestyle.

   Answered on August 19, 2013

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