Logo image
Back
Increased Salary as an Alternative to Group Term Life Insurance
Journal article   Peer reviewed

Increased Salary as an Alternative to Group Term Life Insurance

Anthony P. Curatola, Thomas L. Dickens and Kent T. Fields
The Journal of risk and insurance, v 54(1), pp 119-130
01 Mar 1987
DOI: https://doi.org/10.2307/252885

Abstract

Corporations Employee insurance Employer provided health insurance Gross income Insurance coverage Insurance premiums Life insurance Marginal tax rate Salary Term life insurance
When a company qualifies its group term life insurance (GTLI) plan under Section 79 of the Internal Revenue Code, employees are allowed to exclude from gross income the premiums on the first $50,000 of insurance coverage paid by their employers. All GTLI policies do not qualify for this excludable treatment. Several conditions must first be met, and, for small corporations, the cost of compliance may render the potential benefits prohibitively expensive. A company alternative that is available is to adjust the salaries of employees to enable them to acquire equivalent insurance outside the company. This paper examines the trade-offs available. Specifically, this paper offers a technique for determining when the increased salary alternative is "better" than a qualified GTLI plan and for establishing the degree of savings associated with the choice.

Metrics

5 Record Views

Details

InCites Highlights

Data related to this publication, from InCites Benchmarking & Analytics tool:

Collaboration types
Domestic collaboration
Web of Science research areas
Business, Finance
Economics
Logo image