What tax treatment is generally granted to group life insurance plans?

Group life insurance plans typically receive favorable tax treatment to encourage employers to provide these employee benefits. The premiums paid by employers for group life insurance are generally tax-deductible as a business expense, which benefits the employer financially. Additionally, the death benefits paid out from a group life insurance policy are typically not subject to income tax for the beneficiaries, further enhancing the attractiveness of providing such insurance as part of an employee benefits package.

This favorable tax treatment serves as an incentive for more employers to offer group life insurance, thereby helping to ensure that employees and their families have financial protection in the event of the insured’s death. In this way, group life insurance can be viewed not just as a benefit for employees, but as a part of overall compensation that employers can offer, contributing positively to employee morale and stability.