Group Life Insurance
Group term life is typically sold with accidental death and dismemberment coverage and is an affordable benefit you can offer your employees.
Most group term life policies are guarantee issue with some limits. For example, a group of 2 employees may have a guarantee issue limit of $20,000 and a group of 10 or more may have guarantee issue limits of $50,000 or more.
Employers with only 2 employees are not limited to the guarantee issue amount, but the insurance company may request a letter of insurability (LOI). A letter if insurability is a medical questionnaire
sent by the insurance company.
Each insurance company has different guidelines. If you require a higher guarantee issue limit, please contact our office and one of our Agents can help you.
Although your employees can pre-tax their life insurance premiums, it is not advisable on policies of $50,000 or more. The Internal Revenue Service (IRS) will tax the benefit.
IRC section 79 provides exclusion for the first $50,000 of group-term life insurance coverage provided under a policy carried directly or indirectly by an employer.
For more information on the tax deductions contact a CPA.
The accidental death and dismemberment rider is typically equal to the face amount of the policy. For example, if an employee has a group term life policy with a face amount of $50,000 and dies as a result of an accident, the insurance company will pay the beneficiary and additional $50,000 provided the rider was equal to the face amount.
The dismemberment portion of the AD&D rider generally pays a percentage of the policy face amount for injuries such as limbs, eyesight speech or hearing.