Before December 31, business owners should: update buy-sell values and check coverage still matches them; confirm 101(j) consents are on file for every business-owned policy and that Form 8925 is on the CPA's list; make sure payroll has the imputed income for group term life over $50,000; decide on Section 162 bonuses; make annual exclusion gifts ($19,000 per recipient in 2026) to fund trust premiums; check term conversion deadlines; and review beneficiaries.
We are licensed insurance brokers, not CPAs or attorneys. Treat the tax and legal points on this page as general education, and confirm them with your own CPA or attorney before acting.
On this page
Why December
Several life insurance decisions are tied to the tax year. Annual gift exclusions do not carry over, bonuses must be paid to be deducted, payroll has to report imputed income on W-2s in January, and buy-sell agreements often call for an annual value update. A single review in November or December catches all of it. Print the one-page version of this checklist (PDF) and bring it to your CPA meeting.
Business-owned and buy-sell coverage
- Update the buy-sell value. Many agreements use a certificate of agreed value that owners are supposed to sign every year. If yours has not been updated in years, the price may be stale and the insurance may no longer match it. The buy-sell funding calculator shows the coverage each structure needs.
- Revisit entity-owned buy-sell policies after Connelly. If your corporation owns policies to redeem shares, ask your attorney whether a cross-purchase or insurance LLC now fits better. See After Connelly.
- Confirm 101(j) notice and consent forms are in the file for every policy the business owns on an owner or employee.
- Put Form 8925 on the CPA's list for the business return.
- Check key person amounts against current compensation and profit, using the key person calculator.
- Check loan assignments. Request releases for loans you paid off this year, and confirm required coverage for new loans.
Employee benefits and payroll
- Imputed income on group term life over $50,000 must be in W-2 wages (box 12, code C). Confirm payroll has it, and that more-than-2% S corp owners have the full cost included. Use the imputed income calculator to check the amounts.
- Section 162 and REBA bonuses: decide amounts and pay them before year-end if you want the deduction this year, subject to your accounting method.
- Open enrollment: if your group plan renews January 1, this is the time to add or increase group or voluntary life.
Personal, trust and estate items
- Annual exclusion gifts: $19,000 per recipient for 2026 ($38,000 for a married couple splitting gifts). Gifts to an irrevocable life insurance trust that will pay premiums should go in before December 31, with Crummey notices sent to beneficiaries. See Crummey letters.
- Watch for the 2027 numbers. The IRS publishes next year's exemption and annual exclusion in the fall; we update estate and gift tax limits when it does.
- Term conversion deadlines: many term policies let you convert to permanent coverage without new health questions only until a set age or policy year. If your health has changed, do not let that window close.
- Beneficiaries and owners: marriages, divorces, births, deaths and new trusts all call for a beneficiary review.
- Older universal life policies: request an in-force illustration if you have not seen one in two years. See 7 signs a universal life policy could lapse.
- Charitable plans: if you plan to give a policy or fund one for a charity, the 2026 deduction rules changed; see life insurance and charitable giving.
Frequently asked questions
When should I review my business life insurance?
At least once a year, and whenever the business value changes, an owner joins or leaves, you take on a large loan, or the tax law changes. Many owners pair the review with their year-end CPA meeting.
What is the 2026 annual gift exclusion?
$19,000 per recipient, or $38,000 for a married couple who elect to split gifts. It resets each calendar year and does not carry forward.
Do I need to update my buy-sell agreement every year?
Many agreements call for an annual agreed value. Even when yours uses a formula or appraisal, an annual check that the insurance still matches the expected price avoids a shortfall.
Start your life insurance request
Tell us what the coverage is for and who it would cover. For most requests we ask for each person's date of birth and sex so Erik can prepare for the call. We do not ask health or tobacco questions in this initial request. This is a request for help, not an insurance application or a promise of coverage.
Written by Erik Moran
Erik co-owns Moran Insurance Group with Amanda Moran and handles the agency's life insurance cases, from key person and buy-sell coverage to trust-owned policies. He works alongside clients' CPAs and attorneys, who make the tax and legal calls. More about Erik.
Sources
Moran Insurance Group is a licensed insurance agency. Our brokers are not CPAs, attorneys or tax advisors, and nothing on this page is tax, legal or investment advice. Tax figures and rules reflect our understanding as of October 2026 and can change. Coverage is subject to carrier underwriting and state availability. Confirm anything tax or legal with a licensed CPA or attorney before you act on it.