How Group Life Insurance Is Taxed — The $50,000 Rule
Did you know that part of your group life insurance could be taxable?
The IRS allows the first $50,000 of group term life coverage to be completely tax-free. But if your coverage exceeds that amount, the excess portion may count as taxable income — what’s called a fringe benefit.
Here’s How It Works
Start with your total coverage amount.
Subtract $50,000.
Use the IRS uniform premium table to find the cost of the excess.
Subtract what you personally contribute to premiums.
For example:
If Mary, age 45, has $150,000 in group coverage and pays part of her premium, her taxable portion is small — or sometimes none at all.
Tip for seniors:
If you have group coverage through work or a retiree plan, check your pay stub or HR benefits statement to see if any portion is taxable. Small changes in coverage can affect your income tax.
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About Pivotal Life Insurance
Pivotal Life Insurance is a family owned, independent insurance agency that focuses on income protection and family security through Life Insurance products (Term Life, Whole Life, Final Expense, Pre-Need), Mortgage Protection and Annuities. With a range of product offerings, we accommodate the varying needs of our clients through resources provided by the nation’s top rated carriers. Although we are headquartered in South Florida with a branch in Maryland, we service most of the United States as our agents are licensed throughout the country. Pivotal Life Insurance is one of the fastest-growing agencies and we pride ourselves in putting you, our customers, first.
Insurance Is Pivotal. Cherish what’s important.
For more information or if you’d like to join the Pivotal family, visit www.insuranceispivotal.com or call at 561-412-5500.
