Which statement about group life insurance premiums paid by an employer is true?

• A. As an ordinary and necessary business expense
• B. As Personal Expense for the Employee
• C. Taxable to Employees as Wages
• D. Not Deductible

Answer: (A)

When an employer pays the premiums for group life insurance for employees, the cost is treated as a business expense for the employer and is deductible as an ordinary and necessary business expense. For the employee, the premiums themselves aren’t taxed up to the first $50,000 of coverage. If the group coverage exceeds $50,000, the cost of the excess coverage is treated as imputed income and may be taxed to the employee as wages. So the true statement aligns with the employer deducting the premiums as a business expense, while the employee’s tax treatment depends on the amount of coverage above $50,000.