At-A-Glance: Life Insurance

1. For most employees, life insurance is an important employer-provided fringe benefit.
2. With certain exceptions, the premiums paid by the employer for life insurance coverage and the benefits received under the plans are generally excluded from the employee’s income.
3. An employer's premium costs associated with employee life insurance plans generally will be deductible as an ordinary cost of doing business.
4. Life insurance that is not part of a qualified group-term life insurance plan can be useful where the employer wants to provide life insurance for key employees.
5. Features to look for in a term policy include guaranteed renewability and convertibility. These features can become crucial if the insured's health deteriorates.
6. In assessing a blended policy, it is important to ascertain the percentage of term that is blended with the whole life. The more term that is blended, the less the current premiums will be and the more risk will be incurred in later years because term costs are not guaranteed and increase with age.