Premiums Paid by an Employer on the Individual Life Insurance Policies of His Employees

January 7, 1959 BIR RULING NO. 019-59 Mr. Magtangol P. Pedro c/o Philippine American Life Insurance Co. S. J. Wilson Building, Manila S i r : In answer to the queries contained in your letter referred to this Office by the Regional Director, Regional District No. 3, Manila, I have the honor to inform you as follows: Premiums paid by an employer on the individual life insurance policies of his employees, the family of the insured having been designated the beneficiary, whether such designation is revocable or irrevocable, are, for purposes of the income tax, deductible as business expense, provided that they are ordinary and necessary expenses in carrying on the trade or business of the employer and provided further that he is not, directly or indirectly, a beneficiary under any of said policies. Where the employer (company or corporation) has been irrevocably designated beneficiary in the policy of insurance taken out by the employee, premiums paid on the insurance by the latter are not deductible for purposes of the income tax. In the event of a claim upon death of the insured employee, the employer (company or corporation) as irrevocable beneficiary is not liable to income tax on the proceeds of insurance. On the other hand, amounts received by the insured employee, upon maturity of the policy, as a return of the premiums paid by him under the insurance contract are excluded from his gross income, unless such amounts (when added to those received before the taxable year under such contract) exceed the aggregate premiums or consideration paid, whether or not paid during the taxable year, in which case the excess shall be included in his gross income. (Sec. 29(b)(1) & (2), Tax Code; Sec. 62, Revenue Regulations No. 2, Income Tax Regulations) Very truly yours, (SGD.) MELECIO R. DOMINGO Acting Commissioner of Internal Revenue