The premiums are employer-paid; however, any amount of employer-paid insurance over the amount of $50,000 is known as imputed income and is subject to taxation under Section 79 of the Internal Revenue Code. To calculate the imputed income, please review the imputed income example below.
| Employee's Age | Monthly Taxable Income per $1000 of Protection | Annual Taxable Income per $1000 of Protection |
|---|---|---|
| Under 25 | $.05 | $.60 |
| 25-29 | $.06 | $.72 |
| 30-34 | $.08 | $.96 |
| 35-39 | $.09 | $1.08 |
| 40-44 | $.10 | $1.20 |
| 45-49 | $.15 | $1.80 |
| 50-54 | $.23 | $2.76 |
| 55-59 | $.43 | $5.16 |
| 60-64 | $.66 | $7.92 |
| 65-69 | $1.27 | $13.44 |
| 70 and older | $2.06 | $24.72 |
Example: John is 42 years old and earns $40,000 per year. He is eligible for $120,000 (3 times his annual salary) of employer-paid basic group term life insurance. The amount of taxable insurance is $70,000 ($120,000 minus $50,000). For the employer-provided basic life insurance, the annual imputed income is $84.00 (70 X $1.20). The $84.00 amount will be included on John鈥檚 W-2 (Box 12) statement as taxable income for the year.
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