Group Term Life Law and Legal Definition

Group term life (GTL) is employer- provided life insurance coverage. The premium for coverage in excess of $50,000 is taxable and must be reported as additional income on an employee's Form W-2.

Although the fair market value of group term life insurance is subject to federal income tax, it is not subject to federal income tax withholding. However, its value is subject to withholding for social security and Medicare taxes (commonly referred to as FICA taxes). The value of group term life, however, is not subject to FUTA tax. The first $50,000 of GTL on the employee can be excluded from the employee’s taxable compensation. GTL on an employee’s dependents can be treated as a de minimus fringe benefit if the coverage on any dependent covered by the policy is $2,000 or less. If the dependent coverage on any dependent is greater than $2,000, then the FMV of the entire benefit must be included in the employee’s income based on the highest face value.