In group life plans, premiums are paid by the employer; are they usually tax-deductible?

• A. Yes
• B. No
• C. Only if employee consents
• D. Never

Answer: (A)

Group life insurance premiums paid by the employer are treated as a business expense, so they’re usually tax-deductible for the employer. For the employee, the benefit is generally tax-free up to the first $50,000 of coverage; if coverage exceeds that, the cost of the excess becomes taxable income to the employee (imputed income). So, the employer’s premiums are typically deductible.