A: It depends upon the reason youre buying the insurance. If it is for your familys income benefit, you should pay for it with your own after-tax dollars, so the proceeds go directly to them, tax-free. If your company provides it, some or all of the premium may already show up as income on your annual K-1 or W-2. If the reason is to fund a buy/sell arrangement with other owners, each owner should hold a self-paid policy on all of the other owners, to fund the buyout of a deceased owners share from their survivors or estate. Benefits from company-paid policies are likely to be taxable as income. Consult your accountant to see what is best for you.