The correct answer is: Only II.
Health insurance with benefits payable to an employee is a type of insurance that provides coverage for medical expenses incurred by the employee. This type of insurance is considered to be a form of compensation, and the premiums paid by the employer are therefore deductible as a business expense.
Keyman life insurance is a type of life insurance that is designed to protect a business from the financial loss that would result from the death of a key employee. The benefits of keyman life insurance are typically payable to the business, not to the employee’s beneficiaries. This type of insurance is not considered to be a form of compensation, and the premiums paid by the employer are therefore not deductible as a business expense.
Here is a brief explanation of each option:
- Option I: Health insurance with benefits payable to an employee. This type of insurance is considered to be a form of compensation, and the premiums paid by the employer are therefore deductible as a business expense.
- Option II: Keyman life insurance with benefits payable to Ajay. This type of insurance is not considered to be a form of compensation, and the premiums paid by the employer are therefore not deductible as a business expense.
- Option III: Both I and II. This is incorrect because only option II is not deductible as compensation paid to an employee.
- Option IV: Neither I nor II. This is incorrect because option I is deductible as compensation paid to an employee.