BIR Ruling

October 3, 1975 Mr. Ramon V. Laureola Philam Bldg., United Nations Avenue Manila S i r : This refers to your letter dated September 10, 1975 requesting a ruling on a query stated as follows: "We would like to seek your opinion on the question of whether the proceeds of a non-participating life insurance policy taken by a person on his own life with the family as appointed beneficiaries is subject to tax upon his death. "Relative to the above, will the imposition of the tax be affected if the appointment of beneficiaries is revocable or irrevocable? "Also, would the premiums paid on such a policy be deductible? In reply thereto, I have the honor to inform you that the taxability of the insurance proceeds will depend on whether or not the designation of the beneficiary thereof is revocable or irrevocable. Where the designation of the beneficiary is revocable the proceeds of the life insurance policy form part of the estate of the insured upon his death, even if he failed to exercise his right or option to revoke that designation. As part of the estate, said proceeds are subject to the estate tax. If the beneficiary is irrevocably designated, the right to the proceeds of the life insurance policy, upon the death of the insured, immediately acts on the beneficiary and, therefore, they are not subject to the estate tax. For income tax purposes, the premium payments of the insured are not deductible from his gross income because it is not a business expense, the premium being paid on his personal life insurance policy. (See Sec. 30(a) Tax Code. See also par. 6111-34 Am. Jur. 2d) Very truly yours, (SGD.) EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-1456-040-3