At what point does employer paid life insurance become taxable to the employee?

Answer 1

It does not become taxable to you, at all. You don't pay the majority of the premium each month. Typically, you cannot even convert it to your own personal insurance contract. Some companies allow this, check with your HR dept. to be sure.

Answer 2

The only time i heard of payments being taxable are in a Executive Bonus Plan.
This is how the plan works

The employee takes out a personal life insurance plan and names a beneficiary.

The business pays the policy premium to the insurer. It can deduct the premium on its income taxes as long as the total payments to the employee are considered reasonable compensation.

The employee pays income taxes on the premium.

Answer 3

Just reiterating what the other answerer's have said. Group term life insurance that is for a value of over $50,000 is considered an income. "Considered an income" means that the premiums the employer pays for said policy (usually just a few bucks) needs to be reported on the employees' (and probably employer's) taxes.

Answer 4

Internal Revenue Code section 79 provides an exclusion for the first $50,000 of group-term life insurance coverage provided under a policy carried directly or indirectly by an employer. There are no tax consequences if the total amount of such policies does not exceed $50,000. The imputed cost of coverage in excess of $50,000 must be included in income, using the IRS Premium Table, and are subject to social security and Medicare taxes.

Answer 5

I thought you had to pay taxes when over a 50k benefit. Possible just taxes on the premium. I am not 100% sure of that though.

Answer 6

I'm guessing you mean group life insurance.

The short answer is $50,000

For the long answer: http://www.irs.gov/govt/fslg/article/0,,id=110345,00.html

Answer 7

If the employer pays it, it's not taxable to the employee, period.