This Web site contains a compilation of more than a thousand consumer finance
columns written by Tony Novak from the 1980s through 2006, updated and reformatted for
maximum usefulness today. New material was added after
2010.
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Amount of group life insurance
originally posted: 11/22/2006
revised: 2/21/2011
Q:
Are there limits on the amount of life insurance I can provide to employees of my 5 person business?
A:
No, but as a practical matter in a small business like yours it makes sense to provide $50,000 per employee as a tax-free group insurance benefit and any additional amount provided by a separate individual policy (rather than through group insurance) on an after-tax basis. This simplifies the paperwork and accounting for tax purposes and generally results in the lowest overall cost. The cost is so low for the first $50,000
per person that it does not make sense to provide less than this amount - the administrative cost would probably more than the insurance cost.
Life insurance is usually available as an optional benefit on a group
health insurance plan.
Life insurance coverage up to $500,000 is now available directly online
without any personal appointment, medical exam or blood test.
More resources:
Smart term medical insurance
