Maximize Your Social Security Benefits

Schedule a Free Consultation with an RSSA Social Security Expert


What Are Group Life Plans?

What Are Group Life Plans?

What Are Group Life Plans?

Group life plans provide insurance solutions that also have unmatched tax advantages and investment security for both employers and employees. 

There are multiple parts to a complete group life plan. The first part is group “basic term” life insurance. Basic term has coverage up to $50,000 of death benefit, is employer paid, and is tax-free to employees. The second part is group enhanced term” life insurance. Enhanced term is coverage over $50,000 of death benefit and usually offered as _X_ times salary. Finally, there is “permanent” life insurance. Permanent life insurance provides greater coverage than either basic or enhanced group term and has additional tax advantages. 

Employer Plan Advantages 

Employers offer group life plans as a tool to recruit, retain, and reward employees. Here are some of the key benefits for employers when they sponsor a group life plan: 

  • Except for the initial group term expense, there are no mandatory employer contributions. 
  • Enhanced term and group permanent life plans can be funded with voluntary salary deferrals similar to a 401(k). 
  • Whether employee or employer paid, contributions made to group life plans are 100% deductible by the company in the year paid. 
  • For enhanced term and permanent life plans, payroll taxes owed by the company are reduced by the reduction of participant(s) W-2 wages. 
  • Group life plans strengthen and differentiate your  company for recruiting and retention of employees. 

Employee Plan Advantages

  • Group permanent life plan participation reduces the  employee W-2 and associated Federal, state, local and payroll taxes.
  • Both enhanced group term and group permanent life plans use pre-tax dollars; only a portion of contributions are includible in the participant’s income. For group permanent life, contribution discounts are typically 30% to 40% due to income and payroll tax savings.
  • Group permanent life plan assets accumulate on a tax- deferred basis.
  • Group permanent life plans include accelerated “living” benefits.
  • In the event of a participant’s death, group life plans provide a tax-free survivor benefit.
  • During retirement, group permanent life plans create tax-free income. 

Introducing Your Plan to Employees

Business Planning Group will support your human resource team to ensure that the implementation of your new group life plan is seamless. Employees interested in participating can meet with Business Planning Group associates in a way that suits their work schedules: 

  • HR letters and/or email notices
  • Online communication, webinars or conference calls
  • In-person group meetings and seminars 

About Business Planning Group

Business Planning Group assists organizations and clients in understanding and implementing qualified plans, executive and employee benefit plans, enterprise risk management, and estate and legacy planning strategies. We help clients build personal wealth, attract and retain successful teams, and create a powerful impact into the future. 

Business Planning Group personally works with organizations, owners and executives to help them understand the potential rewards that are available when they take a proactive approach to their financial planning.

Register for a Group Life Webinar

Comments (0)

There are no comments yet, Be the first to comment.
Log In
Your message is required.
Markdown cheatsheet.

Share This Article

Looking For More?

View all Tax Articles

View More Articles

What's Trending?

Trending topics & tools for the CPA community

Should You Form a Nonprofit Corporation?

Recently, we shared a blog post that took a closer look at forming a benefit corporation and the process to become a Certified B Corporation.The......


Everything You Need to Know About Chargebacks and How to Prevent Them

Content originally appeared on the CPACharge blog.If a credit cardholder disputes a charge on their account, they can initiate a chargeback with their card issuer......


Be the CPA That Does More in Less Time With These 6 Productivity Tools

Content originally appeared on the CPACharge blog.These days, it feels like time is more of a luxury than ever before. Aside from everyday distractions from......