Group Term Life Taxable or Not ?

[Guest wwheeler]

I'm hoping to get some information regarding Group Term Life. I have key employees who have large policies that they company is the beneificiary of. Would the premiums for this insurance ( paid by the company ) be taxable to the employees?

thanks for your help......

Wanda

[Guest Harry O]

No. See Section 79(B)(2)(A).

[Guest wwheeler]

thanks... just what I needed

[KIP KRAUS]

Chances are that the policies you speak of are not group term policies, because as far as I know employers are not eligible to be beneficiaries on group term life plans. The policies you have are probably individual policies written on each executive.

I believe you can get the taxability information from the insurance agent/broker that sold the policies to the company.

I also believe that if the executives have no financial interest in the proceeds or cash values of the policies there would be no taxability to them. All of this may depend on the state of issue. If, as I suspect, these policies are individual policies the agent/broker has a responsibility to give you this information.

[mbozek]

Most state laws prevent employers from being beneficaries on group life policies issued on their employees lives. Also employer cannot deduct premium cost of LI where it is beneficiary. Key employee life is sold to employers as COLI or some other product.