The premiums paid by an employer for group life insurance are usually considered to be...

• A. Tax-deductible to the employer
• B. Taxable to the employee
• C. Non-deductible
• D. Tax credits

Answer: (A)

Employer-paid group life insurance premiums are treated as a deductible business expense for the employer. This means the employer can deduct the premiums on its taxes as a normal operating expense. For the employee, the benefit is generally tax-free up to $50,000 of coverage; any coverage over that amount can be treated as taxable income to the employee (imputed income). So, the premiums are usually considered tax-deductible to the employer.