257 / Is the cost of group permanent life insurance paid by an employer taxable income to an insured employee?

Yes. Where a group life insurance policy provides permanent benefits but does not meet the requirements necessary for any part of the benefit to be treated as group term life insurance ( Q 254), an insured employee will be taxed as follows: premiums paid by an employer for insurance on the life of an employee generally will be includable in the insured employee’s gross income if the proceeds of the insurance are payable to the beneficiary of the employee.¹ For the tax treatment of the cost of group permanent insurance under a qualified plan, see Q 3943.

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1.     Treas. Reg. § 1.61-2(d)(2)(ii).

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