What is a Pre-Deduction Life Insurance Policy?
The first thing to know is that a pre-deduction life insurance policy may not cover your funeral expenses or burial expenses.
That being said, pre-tax deductions are payments proceeding interests that are given straight from an employee’s paycheck before withholding salary for taxes.
There are two kinds of benefits deductions:
- Post-tax deductions
- Pre-tax deductions
Pre-tax deductions diminish the employee’s taxable income, which can save them cash when arranging their federal income tax return.
Furthermore, according to the IRS, certain profits are eligible for pre-tax deductions.
And for small businesses, a pre-tax deductions policy can also decrease the tax duty of the employer.
You may also need to apply for a pre-deduction policy in cases where you’re eligible for a life insurance policy, but your policy is cancelled.