According to the IRS, life insurance provided by an employer may be taxed.
Why does this matter?
Often this is the only life insurance that people have. They are relying on this employer-paid life insurance to provide relief for their dependents. Unfortunately, dependents are unlikely to receive the full benefit of the life insurance due to the tax consequences.
This is why we always recommend owning your own life insurance policy.
Read here where we've discussed the dangers of having just employer-paid life insurance.
Many large employers provide life insurance to their employees as part of their overall benefit package. While this is a nice benefit, it is a common misconception that this policy alone is adequate. According to the U.S. Bureau of Labor Statistics study in 2019 approximately 60% of employees had access to employer sponsored plans. That's a large number of people who may not have the proper life insurance to help their loved ones if the unthinkable were to happen.
Follow this link to see what the IRS wants you to know about Group Term Life Insurance and taxes.
Follow this link if you want to talk to someone who wants to make sure you have the right coverage to provide for your loved ones.