Benefits

Employer-paid term life insurance is offered to employees as part of their benefits package. Companies that sponsor term life plans can deduct the premium amounts from their federal taxable income.

Benefits

Employees are able to get a life insurance coverage paying cheaper premiums than privately own policies. Also, eligible applicants are not required to provide proof that they are in good health.

Eligibility

Employers may require employees to meet certain requirements before extending coverage. The employee may have to work for the company a minimum amount of time in order to qualify for benefits such as life insurance.

Taxable Benefits

Benefits received from an employer-paid term life plan will be taxed if the amount is in excess of $50,000. Coverage for spouses and dependents must be less than $2,000 or any amount above the limit will be considered taxable income.

IRS Premium Table

If the value of the policy is more than $50,000, the employer must use the Unified Premium Table created by the Internal Revenue Service to determine the costs of insurance premiums for the excess amount. The results are reported as income on the employee's W-2.

Source:

Payroll Taxes: Calculating the Value of Group Term Life Insurance

State Farm: Group Life Insurance

More Information:

IRS: Employer's Tax Guide to Benefits