Are Life Insurance Premiums Tax Deductible for Businesses in Canada? (2026)
Business owners often ask “are life insurance premiums tax deductible?” For individuals the answer is almost always no. For businesses, it’s still usually no — but there are specific scenarios where a portion may be deductible. This guide explains the common business cases and what to verify with your accountant.
Updated March 17, 2026
The general rule
Most corporate-owned life insurance premiums are not deductible. The most common use cases are key-person coverage (to protect the business) or shareholder/partner coverage (to fund buy-sell agreements). These are usually treated as non-deductible.
The common exception: creditor-required coverage
Some business loans require life insurance as collateral. In those cases, a portion of the premium related to the net cost of pure insurance may be deductible under certain conditions. The details matter (who owns the policy, beneficiary, lender assignment, and documentation), so this is a “talk to your accountant” scenario.
What to read next
Start with our broader guides: are life insurance premiums tax deductible and life insurance premiums tax deductible Canada. For general taxation on policies see is life insurance taxable in Canada.
Official source
For official guidance and updates, refer to the Canada Revenue Agency (CRA).
FAQ
Are business life insurance premiums deductible?
Usually no. Exceptions exist, often tied to creditor-required collateral coverage.
Is key person insurance deductible?
Typically not, but confirm based on your structure and lender requirements.
What should I ask my accountant?
Ask about deductibility, benefit taxation, CDA implications, and required documentation.
Compare coverage
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