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 access to group term life insurance through MetLife at five different tiers: 1X employee’s salary, 2X an employee’s salary, $10,000, $25,000, $50,000.
Basic life insurance (Company-paid policies)
Basic life insurance is 100% paid for by the company and premiums vary based on the policy size. Justworks currently offers five basic life insurance policies:
- $10,000.00 basic life insurance policy
- $25,000.00 basic life insurance policy
- $50,000.00 basic life insurance policy
- 1x employee salary, up to $100,000.00, basic life insurance policy
- 2x employee salary, up to $200,000.00, basic life insurance policy
Companies on Justworks can choose to offer any of the five policies, but they cannot offer more than one policy at a time. Whichever policy is selected will be automatically offered to all benefits-eligible employees.
In all basic life insurance policies, the employee does not pay any tax on the monthly premium for policies up to $50,000.00. For policies that exceed $50,000.00 dollars in value, the monthly premium for the amount exceeding $50,000.00 dollars, is considered taxable income and will be added to the employee’s total income. Unpaid owners are only eligible for the flat policies, as they do not have a salary to base a policy value on.
Note: This policy must be combined with basic accidental death and dismemberment insurance.
AD&D insurance (Company-paid policies)
Accidental death and dismemberment insurance can help replace part of your income in the event of your passing. With accidental death and dismemberment insurance, the policy-holder can designate any beneficiary they would like and the beneficiary would receive the benefit in the event of their passing.
Note: Justworks offers only company-paid policies for accidental death and dismemberment insurance.
(up to $100K)
(up to $200K)
|$0.63||$1.58||$3.15||Up to $6.30/month||Up to $12.60/month|
- No medical evidence required
- AD&D coverage included
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, etc. It will also give you a competitive advantage in retaining great talent for your company.
Who is eligible for Life and AD&D Insurance?
Eligible members would be:
- Full-Time Employees (working over 30 hours/week)
Part-time Employees working 30+ hours/week
- Owners (Paid/Unpaid)
K1 Owners: Basic Annual Earnings means the owner’s gross annual rate of pay from the Policyholder, excluding overtime and other extra pay. "Basic Annual Earnings" for a salesman includes commissions and/or bonuses which shall be averaged for the most recent 12 month period. If the earnings are not based on an annual rate of pay, the Basic Annual Earnings is determined by the following amounts as reported on the Schedule K-1, Form W-2 federal tax return:
the ordinary income or loss from a trade or business activity; and
the guaranteed payments, if the member is a partner; or
the compensation as an officer, salary, or wages, if the member is an S-Corporation shareholder
- K1 Owners: Basic Annual Earnings means the owner’s gross annual rate of pay from the Policyholder, excluding overtime and other extra pay. "Basic Annual Earnings" for a salesman includes commissions and/or bonuses which shall be averaged for the most recent 12 month period. If the earnings are not based on an annual rate of pay, the Basic Annual Earnings is determined by the following amounts as reported on the Schedule K-1, Form W-2 federal tax return:
Is Life and AD&D insurance coverage restricted in some states?
There are no state restrictions.
How do we pay for Life and AD&D Insurance?
The MetLife Life and AD&D insurance are 100% employer-paid. Premiums are charged directly to the employer’s invoice. There are no other fees associated.
How can I enroll in my company?
Life and AD&D Insurance coverage only begins on the 1st of the month. To offer Life and AD&D Insurance to your employees, follow these steps:
First, navigate to your company’s benefits center through HR > Benefits > Add Benefits to add the benefit. Find Life Insurance and click “Set Up Now”.
Next, you will find detailed information about these benefits, including different options, costs, billing, and more. Once you’ve reviewed this information, click “Get Started”.
Select which Life Insurance policy you would like to offer (if any), the policy effective date, and if you’d like to offer Supplemental Life Insurance. Click “Review”.
Finally, once you review your selections, click “Submit” to complete the company enrollment.
How can my employees enroll?
If your company chooses to offer Life and AD&D insurance through MetLife, employees working 30 hours (or more) per week will be automatically enrolled.
How do we pay for Life and AD&D Insurance?
Payments are collected, in full, on the second semi-monthly payroll of each month.
How does offering Life Insurance affect my taxes?
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 employee needs to report the value of coverage in excess of $50,000. The imputed value of this excess amount is also subject to Social Security and Medicare taxes.
Since Life and AD&D Insurance are 100% employer-paid, on your invoice, there will be an additional section called “Employee Deductions.” We will include the cost of the coverage as earnings for your employees and then remove the cost of coverage as an Employee Deduction. There is no impact on your employees and they will not be paid any additional amounts, but this process enables us to properly report the value of coverage in excess of $50,000. If you have any further questions about your invoice, please contact your Customer Success Manager or email@example.com.
Read more about group term life insurance on the IRS website here.
When would the life and AD&D insurance termination occur when the employee is separated?
The policy will terminate at the end of the employee's separation month.
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.