In the United States, 50% of all insured Americans receive health insurance coverage from their employers. These group life term insurance (GTL) plans have many benefits and, if you’re looking for a job, it may be worth looking into whether or not they provide one of these plans.
So, what is GTL? To understand exactly what the insurance policy is and how it can affect a person’s paystub, keep reading.
What Is GTL?
Group term life insurance is a type of life insurance that covers a group of people under one contract. Typically, the policyholder of this type of insurance is an employer that pays a set group rate for their employees.
GTL insurance, if offered by someone’s employer, is part of the employee’s benefits package. The keyword here is “term.” GTL insurance is not a lifelong policy, but rather a policy that is offered for a specified period of time, typically 10-30 years.
There are also additions to GTL insurance. With supplemental group life insurance, employees can pay to add more coverage than what is offered by their employed under the basic GTL insurance.
Dependent group life insurance may be offered as part of an employee’s GTL insurance plan so that an employee’s spouse or child can be covered as well, as long as the employee pays additional premiums.
Benefits of Group Term Life Insurance
There are a few benefits to having GTL insurance. One is that it can be cheaper than having an individual life insurance policy since the employer pays a portion of the cost of the policy, and possibly the premiums.
Also, an individual can join a group term life insurance plan, regardless of their medical history. They won’t need a medical exam to join a plan.
Disadvantages of Group Term Life Insurance
GTL insurance is often limited and won’t cover all of a person’s needs. Those on GTL insurance plans may benefit from having an individual plan as well to cover their medical needs that GTL insurance plans won’t.
Also, GTL insurance usually ends when someone leaves their place of employment or is fired. This means that finding a new life insurance policy is necessary when a person leaves the job.
GTL and Taxes
GTL insurance becomes taxable if the coverage is more than $50,000. If the amount is less, the plan isn’t taxable for the employee. If the plan is taxable, it is subject to Social Security and Medicare taxes.
For dependent group life insurance policies, the policy isn’t taxable if that additional coverage is $2,000 or less. If the coverage is more than that, the full $2,000 or more is taxable, not just the excess amount.
Need a Paystub Generator?
So, now that you know what GTL is, it’s obvious how it can be beneficial to many; although it can be beneficial, it can also be confusing to organize for an entire company. Especially with bigger companies that have hundreds of employees, it’s sometimes hard to keep everyone’s individual policies and wages in order and keep track of group life term insurance on everyone’s pay stubs.
If you need help figuring out your GTL insurance and finances, there are online paystub generators that can help you generate pay stubs for your businesses. They provide pay stub samples that are professional and realistic for your business’ use.