Is disability insurance tax deductible?
For many entrepreneurs, the amount of the premium is a reason not to take out an disability insurance. They find disability insurance too expensive. Are you an entrepreneur or a self-employed person and do you consider to take out an disability insurance? It is good to know that the premium of your disability insurance is tax deductible. This can easily save you a few hundred Euros per year! You can deduct the AOV insurance premium in your income tax return. The premium is deductible in Box 1: Income from work and home.
AOV tax deductible
It is not compulsory to take out disability insurance for entrepreneurs, but it is sensible. If you are unable to work for a longer period of time because you are disabled, you lose a lot of income. During that period your fixed costs will continue. With an AOV insurance you are assured of an income when you are disabled by illness or an accident. For the AOV insurance you pay a monthly premium. You can influence the costs of the AOV insurance. You can choose the insured amount, the waiting period and the final age. These factors are all important when calculating the premium. For example, a higher insured amount means a higher premium.
At the beginning of the new year you receive an overview of your AOV-insurer. This statement states how much premium you have paid that year. A part of the premium is tax deductible and can be recovered through the income tax. You do this by deducting the premium from your income from work and home in Box 1.
How much deductible is AOV?
You may deduct the AOV premium paid that year from your income in Box 1. Depending on the tax bracket of your income, you benefit from a tax advantage of 37.1% or 49.5% of the AOV premium.
Do I pay income tax on an AOV benefit?
Yes, you pay income tax on an AOV benefit. The benefit that you receive is seen as income. Therefore, the insurer must deduct tax from the insured amount and pay it to the tax authorities. These amounts are also reflected in your income tax return. If you become incapacitated for work, you will receive less than the insured amount because wage tax is still withheld. Therefore, take this into account when determining the percentage of your income that you want to insure.
Take out AOV insurance directly at Alpina.nl
In most cases, an employee is automatically insured against the risks of incapacity for work. As a self-employed person, you are responsible for taking out such insurance. Incapacity for work can be a considerable financial blow to a self-employed person. If you are ill for a long time or have to recuperate, you will miss out on a lot of income, while you still have to pay your bills. Would you like to have more financial security? Then you can consider to take out an AOV insurance.
Do you have any questions about the AOV insurance? Please do not hesitate to contact us! Our insurance specialists will gladly help you with all your questions. You can call us Monday through Friday from 08.00 to 18.00 on 088 - 688 3712. You can also send us a message via chat, WhatsApp or Messenger.
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