Group Life Insurance

1. Give employees peace of mind and financial security.

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Offering group life insurance to employees provides them and their loved ones with financial protection and peace of mind in case of unexpected and unfortunate events, such as an employee passing away. It can also help alleviate the stress and financial burden for the employees' dependents.

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2. Easy access to coverage with "Guarantee Issue" policies.

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Group life insurance policies typically have “Guaranteed Issue” coverage, which means that employees can obtain coverage without having to answer medical questions, up to a certain amount. This benefit can be especially valuable for employees who have health concerns and may have difficulty obtaining coverage on their own.

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3. Tax benefits for employees and employers.

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Employers who offer group life insurance can fully deduct their premium contributions as a business expense, up to $50,000 in coverage per employee. If the coverage exceeds $50,000, the excess premium amount is considered taxable income to employees and may affect the tax treatment of the employer's contributions.

 

On the other hand, employees can pay for their portion of the premium with pre-tax dollars through a Section 125 cafeteria plan. This allows employees to reduce their taxable income and increase their take-home pay. Therefore, employers benefit from reduced payroll taxes because the taxable income of participating employees is lowered. So, both employers and employees can greatly benefit from a group life insurance plan.