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Group Term Life Insurance

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Is group term life insurance taxable?

Like any insurance policy, tax benefits are applicable for group term life insurance as well. Group term life insurance tax benefits are twofold - employers and employees can both avail tax benefits. Let’s see how!

  1. Payment of premium 

Employer

If the organization pays the premium completely, then they can apply for tax exemption on the premium paid. As per section 37 of IT act, employers can get tax benefits while purchasing group term plan.

Employee

If the organization and the employees share the premium, then they both can file for tax exemption on the premium paid. For example, if 70% of the premium is paid by the company and 30% of the premium is paid by the employees from their CTC.

Also Read: Group Term Life Insurance Premium Calculation

  1. Death benefit

When an employee dies and the nominee receives the death benefit as a lump sum, this is not taxable. According to Section 10, clause 10D, the nominees are exempted from the lump sum money received on an employee’s demise.

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