Calculating Neil's Reportable Life Insurance for Neil

To calculate Neil's reportable life insurance, the Benefits Administration application uses the greater of the following two calculations.

Because Neil's pretax premium is greater than the cost calculated from the group life W-2 table, the Benefits Administration application uses the pretax premium as the cost of Neil's reportable life insurance.

  1. Using the group life W-2 table, the Benefits Administration application calculates the amount of Neil's reportable life insurance as follows:

    • Neil has $40,000 ($90,000 - 50,000) in excess coverage.

    • The cost of his excess life insurance is $4.00 ($40,000/1,000 * 0.100).

  2. The total pretax premium for Neil's employee life plan for one month is $13.89.