What is Life and AD&D Insurance?

Life and AD&D (Accidental Death and Dismemberment) insurance is a type of insurance that pays out a sum of money upon the insured individual’s loss of life, accidental loss of life, loss of limb, eyesight, hearing, etc. Justworks offers term life insurance through MetLife at three different tiers: $10,000, $25,000, $50,000.

Why offer Life and AD&D Insurance?

The benefit payout is designed to ease the financial hardship of families of the deceased or injured. The benefit can be used to pay for funeral costs, mortgage, higher education, and etc. It will also give you a competitive advantage on retaining great talent for your company.

Who is eligible for Life and AD&D Insurance?

Under Justworks, all employees who work over thirty (30) hours per week are eligible for life insurance.

How much does it cost?

Life insurance is 100% employer paid under Justworks. Please contact our Customer Success team or your Account Manager for more details.

How can I enroll my company?

Life and AD&D Insurance can only be enabled starting the 1st of the month. Please contact your Account Manager or our Customer Success team to start offering the benefit.

How can my employees enroll?

Since this is an employer paid benefit, any employee working over 30 hours per week will be automatically enrolled into the benefit when a company decides to offer the plan as part of their benefits package.

How do we pay for Life and AD&D Insurance?

Payments are collected, in full, on the second payroll of the month.

Legally, when a policy offered is over $50,000 an employee has the pay taxes on the portion of the policy over $50,000.

On the invoice, there is an additional section called 'Employee Deductions' that removes the same amount from Life Insurance and Accidental Death and Dismemberment. By adding the first items as earnings, and then removing as deduction the employee is technically not charged anything, however they are paying taxes on those earnings.

How does offering Life Insurance effect my taxes?

The type of life insurance you offer your employees through Justworks is called group term life insurance (or GTLI). The first $50,000 of group-term life insurance coverage provided under an employer-paid policy is tax free. There are no tax consequences if the total amount of policies does not exceed $50,000. However, when group term life insurance exceeds $50,000 for an employee, the value of coverage in excess of $50,000 needs to be reported as income for that employee using the IRS premium table. The imputed value of this excess amount is also subject to social security and Medicare taxes.

If you have paid over $50,000 to an employee in group term life insurance in 2017, let us know the name of the employee and the amount of coverage by contacting your Account Manager or support@justworks.com.

Read more about group term life insurance on the IRS’ website here.


This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.

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