Life Insurance Imputed Income

Imputed income is the dollar value that IRS puts on the amount of group term life insurance coverage in excess of $50,000. The imputed income occurs when individuals with more than $50,000 of life coverage volume insurance pay less for the coverage than the IRS has determined to be worth, as per the uniform premium table.

Under Section 79 of the Internal Revenue Code, employer provided group life coverage will generate additional taxable income to the employee.

Under current tax laws, you are required to pay income taxes on the "value" of your company provided basic life insurance coverage in excess of $50,000. The "value" is determined by your age and schedule established by the IRS (see table below). This tax liability is called "imputed income." It is added to your gross wages and is included on your form W-2 at the end of the year.

AGE COST per $1,000 for 1 month
Under age 25
25 to 29
30 to 34
35 to 39
40 to 44
45 to 49
50 to 54
55 to 59
60 to 64
65 to 69
70 and Over