What is Group Term Life Insurance?

Group Term Life (GTL) insurance is a common benefit provided by employers, where one contract is issued to cover multiple employees. When employer-paid life insurance coverage exceeds $50,000, employees must include the benefit value for excess coverage in their taxable wages as imputed income. If the employee pays a portion of the premium, the amount can be subtracted from the imputed income. 

The benefit value of Group Term Life coverage is subject to federal income tax, but it is not subject to federal income tax withholding. The benefit value is subject to withholding for FICA taxes. The value of GTL, however, is not subject to FUTA tax. 

For more information on processing GTL in Namely, read Calculating Group Term Life.