What is Group Creditor Life Insurance?
Banks, finance companies, credit unions, retailers, and others may qualify for group life insurance on the lives of individuals who borrow money from the creditor. Although one purpose of group creditor life is to protect lenders against possible financial loss due to the death of a debtor, these companies are often in the business of […]
Can a Trade Association Offer Life Insurance to its Members?
Yes. Employers in the same type of business or industry can sponsor voluntary insurance plans for their members. For instance, a national association or state association of teachers, doctors, lawyers, or CPAs might sponsor such a plan. Generally, a trust acts as the master policyholder for trade association plans. Reproduced with permission. Copyright The National […]
Can a Group Life Insurance Policy Include an Owner-Employee?
Yes. The employer may be a sole proprietorship, partnership, or close corporation. Employees eligible for coverage may include sole proprietors, partners, and employee-shareholders. (Note, however, that tax rules are different for self-employed individuals and partners than for common law employees.) Some group contracts also cover employees of an employer’s subsidiary. Retired employees may also be […]
Ways to Solve the “Reportable Tax Income Cost” Problem with Group Life Insurance for Older Employees
It is true that a very substantial amount of income can be generated by group term life as the employee ages. For ages sixty-five to sixty-nine, the reportable cost per thousand per month is $1.27, while for ages seventy and over, the reportable cost per thousand per month is $2.06.23 One solution is the executive […]
Can Group Life Insurance be Used to Fund a Buy-Sell Agreement?
The use of group insurance to fund a buy-sell is generally not a sound idea. First, if the buyout price is artificially reduced in return for a corresponding increase in the group term coverage (under the pretext that “This makes your buy-sell partially tax deductible. What’s the difference where the family gets the money as […]
How Large Employers (Over 1,000 Employees) Use Group Universal Life Insurance
Special tax treatment applies to small groups (i.e., groups insuring under ten lives). In under-ten group term life plans, premiums are tax deductible for the employer and not taxable income up to the $50,000 limit only if the following conditions are met: The employer provides As its name implies, group universal life combines the economy […]
The Special Tax Treatment Given to Small Employers (Under 10 Employees) with Group Life Insurance
Special tax treatment applies to small groups (i.e., groups insuring under ten lives). In under-ten group term life plans, premiums are tax deductible for the employer and not taxable income up to the $50,000 limit only if the following conditions are met: The employer provides group coverage for either: all full-time employees; or all full-time […]
Employer Tax Implications With Group Life Insurance
Premiums paid by the employer for group term life insurance are income tax deductible as ordinary and necessary business expenses (unless the employer is directly or indirectly the beneficiary of the coverage).18 No deduction is allowed for premiums paid for the coverage on partners or sole proprietors because the premiums would be considered in payment […]
Gift and Estate Tax Considerations when Group Life Insurance Policy Benefits are Paid
Proceeds of group term life insurance are includable in the insured’s estate if they are payable to or for the benefit of the insured’s estate, or if at death the insured holds any incident of ownership regardless of who is named as beneficiary. Incidents of ownership include the right to change the beneficiary and the […]
Employee Tax Implications when Group Life Insurance Policy Benefits are Paid
An employee does not have to report any income with respect to the first $50,000 of life insurance coverage provided by the group plan. Although term insurance protection provided by an employer to an employee is income tax-free for amounts of insurance up to $50,000, an employee must report and pay income tax on the […]