Your employer is considering adding a group term life insurance plan to the employee benefit package....

Your employer is considering adding a group term life insurance plan to the employee benefit package. The premium cost would be fully paid by the organization. Explain how this will impact:

the employees' net pay
the employer's payroll costs

Solutions

Expert Solution

1. Adding a group term life insurance will result in variation of the employee's pay or can stay the same depending on the amount of benefits paid. If the coverage is within the limits of the amounts allowed as deduction by the IRS then the net pay remains same. However if the coverage exceeds the limits set by IRS then the net pay will go down due to tax withholding. However, employees can take a tax credit when filing returns.

2. Employee payroll costs will increase since the company is ultimately the premium is paid by the employer. However, if the employer recovers any cost of the employee the costs reduces by the amount recovered.

ekkarill92 answered 1 year ago

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