New messages from Aflac |
View Notifications opens a dialog
Close X dismisses the notification alert
Accidents can happen at any time, which may lead to physical, emotional, and financial stress. Accident insurance plans can help reduce this stress by giving you and your loved ones an added safety net to help cover medical costs and other expenses.
However, several pieces of the tax code deal with accident insurance premiums and proceeds. The tax code can be confusing, causing some taxpayers to miss potential insurance tax deductions or fail to report insurance-related income on their tax returns. This article will explain accident insurance, what it covers, and the tax consequences of different forms of accident insurance.
Accident insurance is a type of supplemental insurance plan that pays a cash benefit in case you experience a covered accidental injury.1 Insureds receive the payout if they become injured. There are two broad types of accident insurance:
Accident insurance is generally quite affordable.1 You can purchase standalone supplemental accident insurance through Aflac at reasonable rates to help protect yourself and your loved ones against the unexpected.
Don’t wait until it’s too late. Help cover yourself and your family with affordable coverage from Aflac.
Accident insurance helps with expenses from covered injuries caused by an accident. These can include emergency situations to more common accidents. Here are some accident-related expenses that an accident insurance plan can help cover:2
Accident insurance alone may not cover all expenses if you’re out of work due to an accident. However, you can use it alongside a disability insurance plan to help cover medical expenses while the disability plan helps with loss of income.
The IRS doesn’t allow you to deduct premiums you pay to maintain accident insurance coverage.3 The payout may be taxable if you have accident insurance through your employer and the employer pays for your coverage.4
Below, we will explore how personal and group accident insurance may be taxed:
The IRS generally does not tax any payouts you receive that are attributable to premiums you paid.5 Since you pay all premiums on personal accident insurance plans, the IRS may not tax any payout you receive from your plan. Therefore, you may not have to report any of the payout on your tax return.
According to the IRS, you must generally report any amount of payout attributable to employer-paid premiums as income.5 That means if you pay for all of your premiums, you may not have to report any payouts as income. If the employer pays all your premiums, on the other hand, you might have to report your entire payout as income.
If you pay your premiums through a cafeteria plan, and you don’t include the amount of the premium as taxable income to you, the IRS considers your premiums to be employer-paid.5 As a result, the full payout may be taxable.
There are several other IRS rules to be aware of. Working with a tax expert can help you navigate these rules and legally minimize your taxable income from your insurance payout.
Accident insurance may be worth it for the right person. Here are some reasons to consider an accident insurance plan:
Accident insurance can be a low-cost way to help protect your family, help enhance other insurance plans, and give you added financial peace of mind. However, it’s vital to understand the tax consequences of owning an accident insurance plan.
A tax expert can help you get the maximum allowable deductions for any insurance benefits you receive. As a result, you can enjoy the security of accident insurance even more. If you’re ready to get that extra financial safety net, speak with an agent today about guarding against the unexpected with accident insurance.
1 Policygenius What is Accident Insurance? Updated May 30, 2024. https://www.policygenius.com/disability-insurance/what-is-accident-insurance/. Accessed November 18, 2024.
2 GoodRX – What Is Accident Insurance and Is It Worth It? Updated September 20, 2023. https://www.goodrx.com/insurance/health-insurance/what-is-accident-insurance. Accessed November 18, 2024.
3 Policygenius – Are Disability Insurance Premiums Tax-Deductible? Updated July 2, 2024. https://www.policygenius.com/disability-insurance/are-disability-insurance-premiums-tax-deductible/. Accessed November 18, 2024.
4 Internal Revenue Service – Life Insurance & Disability Insurance Proceeds. Updated August 20, 2024. https://www.irs.gov/faqs/interest-dividends-other-types-of-income/life-insurance-disability-insurance-proceeds. Accessed November 18, 2024.
5 Internal Revenue Service – Frequently Asked Questions – Life Insurance & Disability Insurance Proceeds. Updated October 10, 2024. https://www.irs.gov/faqs/interest-dividends-other-types-of-income/life-insurance-disability-insurance-proceeds/life-insurance-disability-insurance-proceeds-1. Accessed November 18, 2024.
Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.
Aflac coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, Aflac coverage is underwritten by American Family Life Assurance Company of New York.
Accident, A36000 series: In Delaware, Policies A36100DE—A36400DE, & A363OFDE. In Idaho, Policies A36100ID–A36400ID, & A363OFID. In Oklahoma, Policies A36100OK– A36400OK, & A363OFOK. In Virginia, Policies A36100VA – A36400VA, & A363OFVA. A37000 series: In Delaware, Policy A371AA & A371BA. In Idaho, Policy A37000ID. In Oklahoma, Policy A37000OK. In Virginia, Policies A371AAVA & A371BAVA.
Aflac life plans - B60000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Not available in Delaware. Q60000 series/Whole: In Arkansas & Delaware, Policy Q60100M. In Idaho, Policy Q60100MID. In Oklahoma, Policy Q60100MOK. Not available in Virginia. Q60000 series/Term: In Delaware, Policies Q60200CM. In Arkansas, Idaho, Oklahoma, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C. Not available in Virginia.
Short-Term Disability, A57600 series: In Arkansas, Policies A57600AR & A57600LBAR. In Delaware, Policies A57600DE & A57600LB. In Idaho, Policy A57600IDR. In New York, Policy NY57600. In Oklahoma, Policies A57600OK & A57600LBOK. In Oregon, Policies A57600OR & A57600LBOR. In Pennsylvania, Policies A57600PAR & A57600LBPA. In Texas, Policies A57600TX & A57600LBTX. In Virginia, Policies A57600VA & A57600LBVA.
Coverage underwritten by Tier One Insurance Company. Aflac Final Expense insurance coverage is underwritten by Tier One Insurance Company, a subsidiary of Aflac Incorporated and is administered by Aetna Life Insurance Company. Tier One Insurance Company is part of the Aflac family of insurers. In California, Tier One Insurance Company does business as Tier One Life Insurance Company (NAIC 92908).
Accident, T37000 series: In Delaware, Policy T37000. In Idaho, Policies T37100ID, T37200ID, & T37300ID. In Oklahoma, Policy T37000OK. In Virginia, Policies T37100VA, T37200VA, T37300VA, T37400VA & T37600VA.
Final Expense - In AR, DE, ID, OK and VA: Policies ICC21-AFLLBL21 and ICC21-AFLRPL21; and Riders ICC21-AFLABR22, ICC21-AFLADB22, and ICC21-AFLCDR22. Aflac Final Expense policies are not available in New York.
Group coverage is underwritten by Continental American Insurance Company (CAIC), a wholly-owned subsidiary of Aflac Incorporated. CAIC is not licensed to solicit business in New York, Guam, Puerto Rico, or the Virgin Islands. For groups sitused in California, group coverage is underwritten by Continental American Life Insurance Company. For individual coverage in New York or coverage for groups sitused in New York, coverage is underwritten by Aflac New York.
In Arkansas, Policy Forms CA7700-MP-AR, CAI7800AR and C70100AR. In Idaho, Policy Forms CA7700-MP(ID), CAI7800ID, and C70100ID. In Oklahoma, Policy Form CA7700-MP(OK), CAI78000K, and C701000K. In Oregon, Policy Form CA7700-MP(OR), CAl78000R and C701000R. In New York, Policy Form Numbers AF7700NY and AF70100NY. In Pennsylvania, Policy Form CA7700-MP(PA) 07, CAI7800PA, and C70100PA. In Texas, Policy Form Numbers CA7700-MP-TX, CAI7800TX, and C70100TX. In Virginia, Policy Form CA7700-MP(VA), CAI7800VA. and C70100VA.
Coverage may not be available in all states including but not limited to DE, ID, NJ, NM, NY, VA or VT. Benefits/premium rates may vary based on plan selected. Optional riders are available at an additional cost. The policy has limitations and exclusions that may affect benefits payable. Refer to the policy for complete details, limitations, and exclusions. For costs and complete details of the coverage, please contact your local Aflac agent.
Aflac WWHQ | Tier One | 1932 Wynnton Road | Columbus, GA 31999 | 800.992.3522
Continental American Insurance Company | Columbia, SC | 800.433.3036
Aflac New York | 22 Corporate Woods Boulevard, Suite 2 | Albany, NY 12211 | 800.366.3436
Z2301351R1
EXP 1/26
