Putting your employees’ minds at ease with life insurance is a valuable benefit you can provide as an employer. Most companies offer basic group life insurance in which the employer pays some or all of the cost of coverage. Supplemental life insurance, additional insurance coverage that can be purchased by the employee, is also a popular benefit option.

Benefit plans may include:

  • Flexible schedules and maximums
  • Benefit amounts based upon an employee’s earnings
  • Accidental death and dismemberment coverage
  • Conversion options
  • Portablilty options

Group Term Life Insurance

The fundamentals

Group-term Life Insurance coverage is insurance that employers offer to employee. Coverage may be agency- or employee-paid. Regularly, employers offer a designated advantage (flat charge or percent of profits) this is value-loose for employees, then offer the choice for employees to buy extra insurance.

Because spouses and dependents aren’t covered under this form of plan, a few employers additionally offer a separate voluntary plan to cover these individuals if individuals choose tp do so.


This coverage is normally very low cost for employers, due to the fact the institution plan spreads the chance over many individuals so charges have a tendency to be low. Plus, in case you make an effort to teach individuals about the importance of life insurance, offering this coverage, employees’ have more of an appreciation for their benefits package.

Group-Term Life Insurance is also nice for employees. Employees get insurance that is either corporation-paid or at least less expensive than a coverage purchased inside an individual  coverage market. Another large advantage for employees is that maximum group-time period plans do no longer require fitness exams.

Employees shopping insurance for my part frequently face premiums contingent at the consequences of a medical examination – or may additionally even be denied coverage on that foundation.

Tax Implications

Group-term life insurance is deductible through employers as an enterprise expense, except the company is a beneficiary of the policy. Employees may also exclude insurance as much as $50,000 from their income. coverage above that quantity ought to be included in an

This coverage is usually very less costly for employers to provide, due to the fact the organization plan spreads hazard over many individuals so charges have a tendency to be low.

worker’s earnings and is problem to social security and Medicare taxes. There are a few exceptions and special considerations to this rule; see the IRS website for more information: www.irs.gov/pub/irs-pdf/p15b.pdf.

The plan might not discriminate in prefer of key employees concerning their eligibility to take part or the quantity of advantages available to them. If the plan does discriminate in choose of key employees, those individuals are not able to exclude their first $50,000 in coverage from gross earnings

Plan requirements

A good way to qualify as a group-term life insurance plan below IRS regulations, the plan is required to meet all of the following conditions listed below:

  • The plan need to offer a trendy death advantage this is excludable from the gross earnings of the beneficiary when paid.
  • coverage should be provided either to all employees or a smaller organization of employees, handiest if group membership is decided solely on the premise of:

-Length of Service

-Marital Status


-Job Duties

-Union Membership

-Participation in an employer’s pension, profit sharing, stock bonus or accident and health plan, or other employment-related factors