The rule in one line
The ATO treats premiums that protect you (your life, your body) as a private expense — not deductible. It treats premiums that protect your income as deductible, because any payout is taxed as income.
Life insurance (term life)
A standard life insurance policy pays a lump sum to your family if you die. Because the benefit isn't assessable income to you, the premium isn't a deductible expense. This applies whether you pay monthly or annually, and whether the policy is with an Australian or overseas insurer.
Life cover held inside super
If your life cover sits inside your super fund, the fund pays the premium from your balance and can generally claim the deduction itself. You don't claim it on your personal return, and it doesn't appear on your bank statement as a separate expense.
Income protection — usually deductible
Income protection (also called salary continuance) pays a monthly benefit — usually up to 70% of your income — if illness or injury stops you working. Because the benefit is taxed as ordinary income, the premium is deductible at label D15 — Other deductions.
- Policy held personally, outside super → premium is deductible.
- Policy held inside super → fund claims it, you don't.
- Mixed policies (e.g. income protection bundled with life or TPD) → only the income protection portion is deductible. Your insurer's annual statement usually breaks this out.
TPD, trauma and critical illness
Total and Permanent Disability (TPD) cover and trauma/critical illness cover pay lump sums for defined events. Those lump sums aren't assessable income, so the premiums aren't deductible when held personally.
Quick reference
| Policy | Deductible? | Label |
|---|---|---|
| Life (personal) | No | — |
| Life (inside super) | Fund claims it | — |
| Income protection (personal) | Yes | D15 |
| Income protection (inside super) | Fund claims it | — |
| TPD (personal) | No | — |
| Trauma / critical illness | No | — |
Worked example
Sam pays $92/month for income protection outside super, and $38/month for term life cover. For FY 2025–26 Sam can claim $1,104 (12 × $92) at D15. The $456 of life cover premiums is not deductible.
What to keep
- The insurer's annual tax statement (shows premium paid and any split).
- Bank or credit-card evidence of the premium payments.
- The policy schedule showing what's covered.
How TaxDuck helps
Upload your bank statement and TaxDuck highlights recurring insurance premiums, tags likely income protection payments to D15, and skips policies that aren't deductible. You get an itemised report ready for myTax or your accountant.
TaxDuck is a record-keeping tool, not tax advice. For advice specific to your situation, speak to a registered tax agent or see the ATO's page on income protection insurance.