Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Under IRC Section 79, employer-paid group term life insurance coverage up to what amount is generally excluded from the employee's gross income?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
IRC Section 79 allows an employer to provide the first $50,000 of group term life insurance coverage without its cost being included in the employee's gross income. The cost of coverage above $50,000 is taxable to the employee using IRS table rates, and the taxability applies even though the employee does not actually receive the premium in cash. This exclusion applies to employer-paid group term plans that satisfy the statute's eligibility and nondiscrimination requirements, and it is a major tax advantage of group life insurance.
Why the other options are wrong
- A) $25,000 is not the Section 79 exclusion amount; the first $50,000 of employer-paid group term coverage is excluded from income.
- C) $75,000 exceeds the statutory exclusion; only the first $50,000 of coverage is tax-free and the excess is taxable.
- D) $100,000 is not the exclusion ceiling; the cost of coverage above $50,000 is taxable to the employee.
Memory hook
First 50 grand of group term = free lunch. Above it, the IRS takes a seat.