The most affordable
benefit you offer.
Also the one people remember.
Group term life costs a fraction of what employees assume it costs, and it is issued without a medical exam up to the carrier's guarantee issue limit. The hard part is not buying it. The hard part is designing the schedule, keeping the §79 imputed income correct on every payroll, and making sure the beneficiary form on file is the one the family will need.
A group life programme is four pieces, and most employers buy one.
Almost every plan we inherit is a single flat basic benefit and nothing else. That is not wrong — it is just half a programme. The other three pieces cost the employer nothing and are what employees actually thank you for, because they solve the coverage problem for the person who needs more than $50,000.
Here is what each piece does and who pays for it. If you already know the structure, skip to the §79 imputed income section, which is where the money and the mistakes are.
Basic group term life — employer-paid
The foundation. A flat face amount — $25,000, $50,000, $100,000 — or a multiple of salary such as one or two times earnings, rounded to the next $1,000. Employer pays the whole premium, every eligible employee is covered automatically, and nobody fills in a health question up to the guarantee issue limit. The flat $50,000 design is popular for one reason: it sits exactly on the §79 line, so no employee has anything added to their W-2.
Voluntary or supplemental life — employee-paid
List-billed coverage the employee elects and pays for through payroll, usually in increments of $10,000 or in multiples of salary on top of the basic amount. It costs the employer nothing but the deduction line. Rates are age-banded and often better than an individual policy for a smoker or someone with a health history — and worse than one for a healthy 35-year-old non-smoker, which we will tell you, and them.
Dependent life — spouse and children
Small face amounts, elected by the employee, covering a spouse and children under one election. It is inexpensive and it answers a real question, because the death of a non-earning spouse still creates immediate cost. Watch the tax line: employer-paid spouse or dependent coverage above a $2,000 face amount stops being a de minimis fringe and becomes reportable.
AD&D — accidental death and dismemberment
Usually bolted to the basic benefit at a matching face amount, and priced low enough that leaving it off is a decision rather than a saving. It pays only for accidental causes, which means it is a supplement to life insurance and never a substitute for it. Read the exclusions before you quote the number to employees — that is where the disappointment lives.
Three kinds of life work, one agency, one renewal date.
We are a group health and compliance agency first, which is exactly why the life programme lands correctly — it is quoted, enrolled and administered alongside the medical plan instead of by a separate vendor with a separate calendar. Employers across Boston, Worcester, the North and South Shores and down through New York and New Jersey; clients in all 50 states through trusted affiliates.
Basic Group Term Life & AD&D
Employer-paid coverage for the whole eligible population, priced on your census and issued without medical underwriting up to the guarantee issue amount.
- Flat $25K, $50K, $100K or more — or a salary multiple
- Guarantee issue with no medical exam
- Matching AD&D, waiver of premium, accelerated death benefit
- Age-reduction schedule written so it is not a surprise
- Rate guarantees of two to three years where available
Voluntary, Supplemental & Dependent Life
Employee-paid coverage the employer sponsors but does not fund. Zero budget impact, and it is the piece that turns a token benefit into real family protection.
- List-billed, payroll-deducted, age-banded rates
- Spouse and child coverage on one election
- Evidence of insurability handled inside the enrollment
- Elections and EOI tracked in Employee Navigator
- Portability and conversion rights explained at termination
Key Person & Business-Owned Life
Individually underwritten coverage the business owns on the people it cannot afford to lose — so operations, payroll and lender covenants survive the first year without them.
- Key person term and permanent policies
- Buy-sell funding for partnership and shareholder agreements
- Executive carve-out and supplemental owner coverage
- §101(j) notice and consent before the policy is issued
- Paired with disability — the more likely loss
Two different tools. Employees need both, and rarely know it.
Group coverage is affordable, easy and conditional — conditional on staying employed. An individual policy is portable and locked in, and costs more because the carrier underwrote one person instead of a census. The right answer for most employees is a base of group coverage with an individual policy underneath it for the amount their family cannot do without. We say this out loud even though it is the less profitable recommendation.
Six choices decide what this plan is really worth.
The quote is the easy part. These six settings are what separate a plan employees value from a plan they forget they have — and they are all negotiable at placement, harder to change afterwards.
Flat amount or a multiple of salary
A flat amount is simple, inexpensive to administer and equal for everyone. A salary multiple scales the benefit to the loss the family actually suffers, which is more accurate and more expensive. One or two times earnings is the common landing spot. Whichever you pick, set a maximum — an uncapped multiple can push a senior employee past guarantee issue without anyone noticing.
The guarantee issue amount
The ceiling below which the carrier covers everyone with no health questions. It scales with the size of the group, so a 12-life employer and a 200-life employer get very different numbers. Anything above it needs evidence of insurability, and a benefit an employee has been told they have but has not been approved for is the worst outcome in this product. Know the number before you publish the schedule.
The age-reduction schedule
Nearly every group life contract cuts the benefit as employees age — commonly to 65% at age 65 and 50% at age 70, with some contracts stepping again at 75. It is in the certificate, it is rarely in the benefits summary, and a 68-year-old employee who thinks they have $200,000 may have $130,000. We put it in writing at enrollment so nobody finds out from a claim.
Whether to stop at $50,000
Cross the §79 line and every employee picks up imputed income on the excess, valued by IRS Table I and subject to Social Security and Medicare tax. For a young workforce the amounts are trivial. For a group with people in their late fifties and sixties they are not, and they land on the W-2 without warning. It is a legitimate reason to keep the employer-paid layer at $50,000 and put the rest on the voluntary side.
Portability and conversion at termination
Two different rights that get confused constantly. Portability continues group term coverage at group rates for a limited window. Conversion turns it into an individual permanent policy with no evidence of insurability — which matters enormously to a leaver who has since become uninsurable. Both have short deadlines, usually 31 days, and both are the employer's notice obligation.
How beneficiary designations are collected and kept
The most common failure in this entire product is not a pricing error — it is a beneficiary form naming an ex-spouse, or no form at all, sitting in a filing cabinet from 2014. Designations belong in the enrollment system, visible to the employee, updated at every life event. That is a platform problem, and it is solved.
Nobody calls to check their group life certificate. The one time it is read, it is being read by a family, and everything about it has to already be right.
Imputed income, in plain English and actual numbers.
Section 79 lets an employer give every employee up to $50,000 of group term life completely tax-free. Above that, the employee has to report the value of the excess as income — and the value is not what the employer paid. It is set by an IRS table based only on age, so a low-cost plan and an expensive plan impute exactly the same amount.
The arithmetic: take the coverage, subtract $50,000, divide by 1,000, multiply by the Table I rate for the employee's age at year end, multiply by the number of months covered, then subtract anything the employee paid with after-tax dollars. The result goes on the W-2 and is subject to Social Security and Medicare tax.
Two traps worth naming. Employer-paid spouse or child coverage above a $2,000 face amount is reportable too. And under the “straddle” rule, even employee-paid voluntary coverage can be treated as employer-carried — and become taxable — if the rate schedule sits on both sides of the Table I rates.
The IRS Table I rates, per $1,000 per month
Under 25 — $0.05 · 25–29 — $0.06 · 30–34 — $0.08 · 35–39 — $0.09 · 40–44 — $0.10 · 45–49 — $0.15 · 50–54 — $0.23 · 55–59 — $0.43 · 60–64 — $0.66 · 65–69 — $1.27 · 70 and over — $2.06. Age is taken at the end of the tax year. These rates are not indexed — they have been the same since 1999.
A worked example on $150,000 of coverage
$150,000 less the $50,000 exclusion leaves $100,000 of taxable coverage, or 100 units. A 42-year-old imputes 100 × $0.10 = $10.00 a month, so $120 for the year. A 57-year-old on the identical plan imputes 100 × $0.43 = $43.00 a month, so $516. A 66-year-old imputes $127.00 a month — $1,524 for the year. Same benefit, same premium, twelve times the reportable income.
Why the flat $50,000 design is so common
Because it stops exactly at the line. No imputed income, no payroll coding, no year-end reconciliation, no employee asking why their taxable wages went up. Employers who want a richer benefit without the payroll consequence keep the employer-paid layer at $50,000 and let employees buy up through the voluntary plan with after-tax payroll deductions.
Where it goes wrong in practice
Payroll never got told the plan changed. Someone imputed on the whole face amount instead of the excess. Age bands were never re-run after a birthday. Dependent life was ignored entirely. After-tax employee contributions were not offset. None of these is exotic — all five turn up in plans we take over, and all five are correctable before anyone notices.
This is general information, not tax advice
The rules above are the general framework under IRC §79 and Treasury Regulation §1.79-3. Your own facts — plan design, contribution structure, ownership, controlled group status — can change the answer. We will work through it with your payroll provider and your CPA rather than around them. More on ERISA and §125 compliance.
Group life is an ERISA plan. Most employers treat it as a product.
The certificate the carrier issues is not a summary plan description, and a certificate alone does not satisfy ERISA. This is where a compliance agency earns its place: the same wrap document, the same SPD distribution and the same Form 5500 discipline we already run on the medical plan should be covering the life plan too.
If your group health plan is with us, the life plan folds into the work we already do. If it is not, we will still tell you what is missing. See our group health and compliance work.
Wrap document and SPD
Group life is an ERISA welfare benefit plan, so it needs a plan document and a summary plan description distributed to participants. A wrap document pulls the life, medical, dental, vision and disability certificates under one compliant plan instrument instead of five loose booklets. How our ERISA wrap service works.
Form 5500, and the participant count that triggers it
Filing is generally required once a welfare plan has 100 or more participants at the start of the plan year; smaller insured, unfunded plans are usually exempt. Wrapping the benefits together changes how the count and the filing work — sometimes for the better, sometimes not. It is worth deciding deliberately rather than discovering the threshold after you crossed it.
Beneficiary designations, and keeping them current
An outdated designation is enforceable. Carriers pay the named beneficiary, not the intended one, and the resulting disputes are ugly and expensive. Designations should be captured electronically at enrollment, prompted at every qualifying life event, and visible to the employee year-round — not filed once and forgotten.
Notices at termination, alongside COBRA
Life insurance is not a COBRA benefit, but the conversion and portability windows open at exactly the same moment and are just as short. Building both into the same offboarding step is the only reliable way to make sure a leaver hears about them in time. See our COBRA administration.
Non-discrimination, if the plan is self-insured or carved out
§79 has its own non-discrimination rules. Fail them and key employees lose the $50,000 exclusion entirely and impute on the greater of actual cost or Table I — a much worse result than the plan intended. Owner-heavy groups and executive carve-outs are where this actually bites; a plain flat schedule for everyone rarely has a problem.
The administration is the product. So we gave you the platform.
Eligible client groups get Employee Navigator at no cost — Waugh absorbs the subscription fee. It is the benefits and HR administration platform we run every group on, with AI-assisted plan building, 600+ carrier, payroll and TPA integrations, automated compliance tracking and online enrollment that employees finish on a phone.
Employee Navigator acquired the Ease platform in 2023, and through 2026 we are moving every remaining Waugh client from Ease onto the modern portal. If you are still on Ease, that migration is already scheduled and there is nothing for you to do.
This is the same technology we lean on hardest for startups and fast-growing small employers — the groups that need a real life and health programme running before they have anyone whose job title contains the letters HR.
Elections, EOI and beneficiaries in one record
Voluntary life elections, evidence-of-insurability status and beneficiary designations sit on the employee's own record, not in a spreadsheet. Employees can see and update their designation without emailing HR, and pending EOI is visible rather than assumed approved.
Salary changes flow into the coverage amount
On a salary-multiple schedule the face amount has to move when pay moves, and the imputed income calculation has to move with it. Payroll and carrier integrations mean that happens on a feed rather than in a quarterly clean-up that nobody has time for.
New hires and terminations, without the paper
New hires enroll themselves inside their eligibility window; terminations trigger the offboarding sequence including conversion and portability notices. The carrier gets a clean file, and the employer stops discovering a missed enrollment at renewal.
An audit trail that exists before you need it
Who elected what, when, and what they were shown. That record is the difference between a straightforward claim and a difficult conversation, and it is worth far more than it costs — which for eligible groups is nothing.
Rooted in the Northeast. Licensed nationwide.
Life insurance is regulated state by state, and multi-state employers routinely discover that the schedule they agreed to does not sit identically in every jurisdiction their employees live in. Situs, filing and conversion rights all vary. It is a small detail until it is the reason a claim is complicated.
Our home ground runs from Boston and Andover through Worcester, the North and South Shores, the Cape and Western Massachusetts, down through Connecticut, New York City and all five boroughs, Long Island, New Jersey and Philadelphia, plus New Hampshire and Maine. Beyond it we serve clients in all 50 states, directly where we are licensed and through trusted affiliates elsewhere.
Independent, and not owned by a carrier
There is no house plan we are expected to place, and we market the life line to multiple carriers at every renewal rather than defaulting to the incumbent. NAHU-accredited, AHIP-certified, multi-state licensed. More on our about page.
Life quoted with the medical, not after it
Bundling life, disability, dental and vision with the medical placement usually improves the rate guarantee and always simplifies the renewal. One census, one timeline, one agency accountable for the whole package. See income and disability coverage.
Two lives is a real group
Small employers are not a rounding error to us. Groups from two lives upward, startups that need a programme in place before their first funded hire, and 1099-heavy businesses where the owners need their own coverage alongside the group plan.
The individual side, when group is not enough
When an employee needs coverage that survives leaving, or an owner needs more than guarantee issue allows, we write it individually. Individual life insurance and our free planning tools are both there for that conversation.
Send us a census. We will send back real numbers.
Group life prices off headcount and average age, so a rough census is usually enough to quote from — no medical information required. Tell us what you have now, or what you are thinking about, and a licensed specialist will come back with schedules and pricing. There is no cost and no obligation.
This page is general educational information, not legal, tax or insurance advice for a specific situation. Benefits, guarantee issue amounts, age-reduction schedules, portability and conversion rights vary by carrier, by plan and by state — the policy and certificate govern. Tax treatment described here reflects IRC §79 and Treasury Regulation §1.79-3 in general terms; confirm your own position with your tax adviser.