Date: Tue, 27 Jan 2004 12:11:12 CST
From: ttroberts@aol.com (TTRoberts)
Newsgroups: misc.invest.financial-plan
Subject: Re: life insurance from work, taxed at face value ? ? ?
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kellingsNOSPAM@commspeed.net, you asked:

<< Somewhere in my past, I was a captive agent for Prudential, & in those
days, life insurance was one of the last sacred things, "tax man, stay away..."
just got a memo today from the place of employment (healthcare provider)
stating that we are being taxed on life insurance we buy as employees, if face
value is > 50k now, it's been many years since i worked in the industry, but,
doesn't that sound strange? >>

Yes, it does sound strange.  I am in the life insurance industry and try to
keep my ears close to the ground to hear about changes that may occur.  But I
haven't heard anything that has changed this in this way.

<< I'm paying for the policy - yes its probably at a great premium... but
they are taxing me - on the face amount???  >>

Hmmmm???  Well, I don't think they're taxing you just yet.  

<< any opinions? can someone lite the way for me here?  ever heard of this?
should I ask a lawyer?   sounds really bogus to me.....  >>

Unless the law has changed recently, it pretty much follow the same kind of
rule that disability follows where if the employer pays the premium (this is
for amounts > $50k of group coverage), then the death benefit is taxable.  But
if YOU are actually paying for the coverage and you're employer is not
reimbursing you in some way, the death benefit would not be taxable.  I feel
pretty certain the laws remains this way.