Question

Gray’s employer is now offering group-term life insurance. The company will provide each employee with $100,000 of group-term life insurance. It costs Gray’s employer $300 to provide this amount of insurance to Gray each year. Assuming that Gray is 52 years old, determine the monthly premium that Gray must include in gross income as a result of receiving the group-term life insurance benefit. Use Exhibit 12-08.

Answer 1

Gray must include a monthly premium of $25 in gross income as a result of receiving the group-term life insurance benefit.

Step-by-step explanation:

To determine the monthly premium that Gray must include in gross income as a result of receiving the group-term life insurance benefit, we need to calculate the cost of coverage and divide it by 12 to get the monthly premium amount. In this case, Gray's employer provides $100,000 of group-term life insurance at an annual cost of $300. To find the monthly premium, we divide $300 by 12, resulting in a monthly premium of $25.

Answer 2

Step-by-step explanation:

The Employers pay some benefits to the employees apart from the compensation for services of the employees.

Such benefits are referred to as Fringe benefits. A part of the group-term life Insurance benefit is taxable and other part is non-taxable.

Group term-life Insurance is taxable up to a statutory limit of $50,000.

To see the calculate Mr G's taxable annually group-term life insurance premium is in the attached file.

Hence the taxable Insurance premium per month is $11,50

Refer to exhibit 12-11 for the cost for $1,000 of group-term life insurance premium (If the age bracket to form 50-54) .