BrianOB wrote:My wife just started a new job and her new employer is offering her a "free" $50,000 life insurance policy. Supposedly it doesn't come out of her paycheck, and it's a guaranteed minimum regardless of health. You can pay for more coverage but we don't need it (or even this really).
Obviously, I'm suspicious of anything that claims to be "free". We don't want to turn down (potential) money we're entitled to but I believe "free money" exists as much as I believe in the Tooth Fairy.
What are they getting out of this? Why are they offering her this? Is there a catch? What questions should we be asking?
In a typical broad-based leveraged COLI transaction, a corporate employer would purchase policies on masses of lower-level employees, sometimes without the employees' knowledge or consent. When an insured employee died, the company received the death benefits, and the employee's family typically received either a small portion of the proceeds or nothing.
Saving$ wrote:Most companies have it. Usually up to 1x or 2x your salary. Anything over $50k is taxable and shows up on your W2 at the end of the year.
LadyGeek wrote:Saving$ wrote:Most companies have it. Usually up to 1x or 2x your salary. Anything over $50k is taxable and shows up on your W2 at the end of the year.
If it goes above $50,000 the paycheck will have an entry called "Imputed income" (not part of your salary deductions). That's where you'll find out how much your company has paid for coverage above the $50k limit, which is taxable income to you. If it's not in the paycheck summary, it will be in the year-end salary summary and W2 Box 12 as Code C.
From the IRS: Group-Term Life Insurance
Users browsing this forum: aorin, Bing [Bot], covepatrol, DaftInvestor, Google [Bot], IlliniDave, kbrinaldi, linguini, Minnesota97, ray.james, SnapShots, teacher, travelnut11, tyrion, Will do good and 73 guests