Our church pays the premiums for a whole life insurance policy for our pastor providing a $100,000 life benefit, and he is covered under our group term policy at the $50,000 coverage level. Are any of these benefits taxable?
The $50,000 group term life coverage is tax-free (for coverage in excess of $50,000, the excess coverage has a taxable element). The $100,000 whole life coverage is fully taxable and reportable on Form W-2.
Dan Busby is a CPA and president of the Evangelical Council for Financial Accountability (ECFA).