Offering your employees life insurance is a very inexpensive and much appreciated benefit. Particularly for those who might have trouble qualifying for private insurance, since group policies have liberal ‘guarantee issue’ guidelines.
Premiums are as low as 20 cents per $1,000. So a $25,000 policy costs just $5.00/month. And for a few pennies more, dependents can also be covered.
Many employers offer policies based upon salary – say, 2 or 3 times earnings. If your employee makes $50,000/year, and you offer a $100,000 policy, that’s a nice bennie for only about $240 a year.
The catch: the IRS requires the cost for employer‐paid policies in excess of $50,000 to be reported on W‐2s. And if the dependent coverage exceeds $2,000, that cost must also be reported.
So that ‘free’ benefit might end up having some cost – albeit very small – to your employees.