In what situation would disability income insurance premiums be a deductible expense?

The situation where disability income insurance premiums would be a deductible expense occurs when a corporation pays for group disability income coverage for its employees. In this case, the premium is considered a business expense as it is part of the compensation package provided to employees. Companies can deduct the cost of these premiums on their tax returns because they are providing a fringe benefit to their employees. This helps the corporation lower its taxable income.

In contrast, when an individual pays for their own coverage, those premiums are generally not deductible. Self-employed individuals might have the ability to deduct premiums under certain conditions, but it's not automatic in the same way that a corporation’s deductions are for group plans. A policyholder receiving benefits under the policy does not relate to deductibility, as this pertains to the nature of premium payment rather than receiving benefits.