Deduct borrower’s death insurance from your tax return : what is the best tax choice, a single or annual payment ?

If you do not want to leave any debts to your heirs, you can insure against death or disability for the remaining capital still to be repaid of your home loan on the date of your death.

How are those premiums tax deductible and what is the most advantageous tax choice?


Let’s look at the two possibilities :


1 | Annual payment of your premiums


The annual premium is taken into account as a special tax deductible expense up to €672.00 per person living in your household.


This tax ceiling applies to the total interests on personal loans and bank accounts, civil liability insurance premiums, accident insurance, capitalisation life insurance (min. 10 years), death and disability and mutual and supplementary health contributions.


If you already deduct a large amount before taking out your borrower’s death insurance you may be able only to deduct partially or none of the annual premium


Let’s take an example :


A family with two adults and two children benefits from a tax-deductible ceiling of :

Tax ceiling : 4 people in the household x 672,00 € = 2,688,00 €

They already have tax deductible expenses as follows :


Interests on a car loan : 500,00 €

Motor vehicle civil liability insurance : 300,00 €

Supplementary health contribution : 1.200,00 €

Amount remaining to be deducted : €2,688.00 – €2,000.00 = €688.00


If the annual premium of your borrower’s death insurance exceeds this amount, the couple will only be able to deduct 688,00 €.

In addition, if the annual premium is paid for a very long period, it is possible that during the last years of the payment, the children are at charge of the couple.

The tax limit will be reduced to 2 adults x 672,00 € = 1.344,00 €. In that case, it is possible that the annual premium could be no longer tax deductible.


2 | Single payment of your borrower’s death insurance


By a single payment of the related premium, you benefit from a second tax deductible ceiling added to the first ceiling described in the previous section.


The single payment must not exceed 6.000,00 €. This ceiling is increased by 1.200,00 € for each child of the household and the total is increased by 8% per year beyond 30 years without exceeding a total surcharge of 160%. The age to be taken into consideration is the one of the starting date of your death insurance. If you are married or in legal partnership, this amount is calculated individually per parent in the household.


If a couple wishes to optimise the tax-deductible single-payment ceiling, the oldest parent will take the children into his or her charge for the calculation of the ceiling.


Let’s take an example :

In the same family of 2 parents and 2 children as mentioned above, the first parent is 38 years old and the second parent, 35 years old at the starting date of the borrower’s death insurance.


First 38-years-old parent :

  • Basic ceiling : 6.000,00 €
  • Bonus : 2 x 1.200,00 € = 2.400,00 €
  • Surcharge : 8% x 8 x 8.400;00 € = 5.376.00 €


Total: 13.776,00 €

Second 35-years-old parent :

  • Basic ceiling : 6.000.00 €
  • Surcharge : 8% x 5 x 6.000,00 € = 2.400,00 €


Total : 8.400,00 €

Total second deductible tax ceiling : 22.176,00 €


Of course, we can calculate the exact tax ceiling deductible for your single payment of your borrower’s death insurance and estimate the related tax savings.