One of the greatest benefits that employers provide employees with may be a group term life insurance policy. It is considered to be a great fringe benefit as an added incentive for any future or current employees. All employers’ Life Insurance policies are taxable. Each employer’s Life Insurance policies differ and the values are based on the cost to the employer. Now is the time to initiate an application and lock in a low rate for a Term Life Insurance policy.
Employer’s Life Insurance Policies
Generally, the rule for taxing fringe benefits (employer’s Life Insurance policies) is that all fringe benefits are taxable to the recipient based on the fair market value. The provider of the benefit is responsible for withholding federal income taxes, FICA taxes (social security and Medicare) and paying FUTA taxes. The taxes may be withheld from the recipient’s cash compensation. The fair market value of this Life Insurance fringe benefit may be reduced.
Group Term Life Insurance Policies
The fair market value of group term life insurance is also subject to federal income tax. Group term life insurance is not subject to federal income tax withholding. Each group term life insurance policy has a value that is subject to withholding for social security and Medicare taxes. The value of group term life insurance is not subject to FUTA tax. In order to calculate the fair market value of an employee’s group term life insurance policy will depend on factors like the employee’s age and maybe other factors as well. Usually there is a human resource person that you can confer with and get advice from. If options are offered to you from your employer, definitely take the time to reach them and the company’s that actually hold the Life Insurance Policy.
Employer’s group term life insurance policies may also provide individual policies on each of an employee’s dependents and perhaps their spouse’s and their children. Surely your pay check may reflect increased deductions. It is very important to confer with the human resource person or department at your job so that you are informed completely with regard to your employer’s group term life insurance parameters, as well as any other benefits that are offered. We have Whole Life and Term Life Insurance professionals ready to assist you. Get cheaper term life insurance coverage which will protect your loved ones.