Discuss an amount equal to double their annual salary

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A company would like to provide life insurance coverage for its employees. The company has three officers who make $100,000 each per year and three staff employees who make $40,000 each per year. The president comes to you asking for your advice on how to provide the coverage. He provides you with the following three options, each of which will cost the company $15,000 per year.

Option 1 - Give each employee $2,500 to purchase coverage.

Option 2 - Buy a group term life insurance policy in which each employee would be covered for an amount equal to double their annual salary.

Option 3 - Buy a whole life insurance policy which would provide each employee with $100,000 worth of coverage.

Evaluate the options and advise him on the tax consequence for each. Provide your recommendation of which option the president should choose for the company.

Reference no: EM131806525

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