In general, key person insurance is not tax-deductible as a business expense. This means that businesses must pay the policy premiums using post-tax dollars. However, death benefits from key person insurance policies are generally not subject to income taxes, regardless of whether the business is a corporation or some other type of entity. C corporations are an exception to this rule, as they must report the key person insurance policy and any death benefits received in their calculation of the alternative minimum tax (AMT). It is important for businesses to understand these tax implications when considering key person insurance, as they can affect the overall cost and value of the coverage.