Life Insurance
Although not required to by law,
many employers offer group-term life insurance coverage to their employees. Benefits
under a group-term life insurance policy are paid only if the insured dies
during the policy’s term.
Advantages of Group-Term Life Insurance
- Group-term life insurance generally
features lower premiums than individual term life insurance.
- In general, the cost of up to
$50,000 of group-term life insurance can be excluded from an insured employee’s wages for federal income tax,
Social Security, Medicare, and federal unemployment tax purposes.
- Premiums paid by employers are tax
deductible for those employers as long as they are not policy beneficiaries.
- Group-term life insurance can be
offered as part of a cafeteria plan, allowing employees to contribute toward
their coverage on a pre-tax basis.
Requirements for Employers
To preserve the tax exclusion
mentioned above and comply with the Internal Revenue Code, employers generally must: