As a key employee of your corporation, you can get “free” life insurance and disability insurance. By “free” insurance, I mean that the insurance premiums are fully deductible by the corporation and reduce its pretax income. At the same time, they are not treated by the IRS as income to the insured. This “free” insurance may be worth several hundred dollars a year.
The “free” life insurance—sometimes called §79 insurance—is limited to one-year, renewable term policies of up to $50,000 face value as group insurance in groups of 10 people or more. However, smaller groups—including a “group” of one—can qualify for similar renewable term policies that get similar tax treatment from the IRS.