Tax Advantage in Loan Life Insurance for Paid Employees

You may have received credit life insurance from a bank or insurance company to secure your loan, and you may have an affordable price advantage in life insurance and lower the cost package. But that’s not all you can do. You can make the most of all your rights by taking advantage of the tax advantage applicable in life insurance.

If you are a paid employee or a taxpayer subject to declaration, you may deduct the premiums you have paid from the tax base in accordance with Articles 63 and 89 of the Income Tax Law. Thus, your insurance premiums will earn you from the first day according to your tax bracket, with the limit of 5 5% of your monthly wage and an annual total of annual minimum wage ”limit.


General Conditions for Tax Deductions

Tax Deductions


  • In case insurance premiums are paid in advance by the paid employee or if the installment periods are determined for more than one month, the premium amount is discounted (provided that it is paid) by taking into consideration the months it is related to.
  • and a central current insurance company in Turkey Turkey’s insurance must be prepared.
  • The premium amount to be deducted is deducted from the income tax base for the month in which it is paid, provided that it does not exceed 15% of the gross wage obtained in the month it is paid and the annual minimum wage amount.
  • In the tax deduction, all contributions paid by your employer to the Private Pension System on your behalfs, such as life or health insurance premiums, are considered together.


What should you do to benefit from a tax deduction?

tax deduction

In the event that insurance premiums are paid by the payee, the employer must be given the receipt or receipt of payment before the payroll of the relevant month is issued in order to benefit from the tax deduction.

An Example of Tax Deduction…

Let’s take a look at the financial situation of Best Finance, who has just received a loan life insurance policy, and there is a cumulative life insurance policy that Best Finance has already received and pays premiums…

Monthly Gross Fee $ 5,000


* Credit Life Insurance Premium (Monthly)

* (100% of the premium paid since credit life insurance is a risk life insurance)


$ 200
Paid * Cumulative Life Insurance Premium (Monthly)

* (50% of premium paid on cumulative life insurance products can be calculated)


$ 200
15% of Monthly Fee $ 750


Since Best Finance’s total monthly insurance premium is less than 400 TL, the annual gross minimum wage and 15% of the monthly wage, all of the risk life insurance premium paid and 50% of the savings life insurance premium may be subject to a tax deduction.


And Let’s Calculate….

Monthly Gross Fee $ 5,000
Maximum amount deductible from tax base (Gross Fee x 15%) $ 750
Credit Life Insurance Premium (100% of the Paid Premium) $ 200
Different Cumulative Life Insurance Premium (50% of Paid Premium) 100 TL
Total Monthly Premium Paid 200 + 100 = $ 300
Income Tax Rate * 15%


300 * 15% = $ 45

(*) Individuals’ income tax rate varies during the year as it is an increasing rate tariff

If you do not know your tax base rate….

tax base

If you do not know which tranche you are in regarding the income tax rate, you can examine the current situation for 2018 below and find out your own situation.

In the table below, you can find your tax base considering the increased value of the salaries you receive from January to December. When the sum of your monthly salaries exceeds one of the following levels, you enter into a higher tax bracket.

If your salary is up to 14.800 TL;

You are in the 15% tax zone.
If your salary is between 14.800 – 34.000 TL; 15% tax bracket for the portion of TL 14.800

20% tax for over 14.800 TL

If your salary is between 34.000 – 80.000 TL; 20% tax for the portion of TL 34,000

27% tax bracket for over 34,000 TL

If your salary is 80,000 or more 27% tax bracket for TL 80,000

35% tax for over 80.000 TL