Group Life Insurance is one of the most popular “fringe benefits”. It is a relatively inexpensive benefit which employees appreciate.
Frequently Group Life Insurance has been sold in conjunction with Group Medical. However, HMOs do not usually offer Group Life, an opportunity exists to provide a much appreciated benefit on a stand alone basis which costs relatively little.
Taxability of Group Term Life Insurance
The IRS has announced new Table 1 rates to be used in computing the cost of excess group term life insurance (over $50,000) after June 30, 1999. These rates are used in calculating the cost of group term life insurance coverage in excess of $50,000, a cost which is taxable to the employee. The cost of up to $50,000 of coverage is tax exempt. If the employee contributes toward the cost of the insurance, all of his contribution may be subtracted from the amount which would otherwise be taxable to him.
Uniform Premiums for $1,000 of Group Term Life Insurance
Cost of $1,000 of Protection for One-Month Period
|Age Bracket||Age Bracket|
|Under 25||0.05||50 to 54||0.23|
|25 to 29||0.06||55 to 59||0.43|
|30 to 34||0.08||60 to 64||0.66|
|35 to 39||0.09||65 to 69||1.27|
|40 to 44||0.10||70 & Above||2.06|
|45 to 45||0.15|