Group Permanent Life

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.