26 U.S.C. § 79: Group-term life insurance purchased for employees

the cost of $50,000 of such insurance, and the amount (if any) paid by the employee toward the purchase of such insurance. the cost of group-term life insurance on the life of an individual which is provided under a policy carried directly or indirectly by an employer after such individual has terminated his employment with such employer and is disabled (within the meaning of section 72(m)(7)), the employer is directly or indirectly the beneficiary, or a person described in section 170(c) is the sole beneficiary, the cost of any group-term life insurance which is provided under a contract to which section 72(m)(3) applies. For purposes of this section and section 6052, the cost of group-term insurance on the life of an employee provided during any period shall be determined on the basis of uniform premiums (computed on the basis of 5-year age brackets) prescribed by regulations by the Secretary. subsection (a)(1) shall not apply with respect to any key employee, and such cost determined without regard to subsection (c), or such cost determined with regard to subsection (c). the plan does not discriminate in favor of key employees as to eligibility to participate, and the type and amount of benefits available under the plan do not discriminate in favor of participants who are key employees. such plan benefits 70 percent or more of all employees of the employer, at least 85 percent of all employees who are participants under the plan are not key employees, such plan benefits such employees as qualify under a classification set up by the employer and found by the Secretary not to be discriminatory in favor of key employees, or in the case of a plan which is part of a cafeteria plan, the requirements of section 125 are met. employees who have not completed 3 years of service; part-time or seasonal employees; employees not included in the plan who are included in a unit of employees covered by an agreement between employee representatives and one or more employers which the Secretary finds to be a collective bargaining agreement, if the benefits provided under the plan were the subject of good faith bargaining between such employee representatives and such employer or employers; and employees who are nonresident aliens and who receive no earned income (within the meaning of section 911(d)(2)) from the employer which constitutes income from sources within the United States (within the meaning of section 861(a)(3)). A plan does not meet the requirements of paragraph (2)(B) unless all benefits available to participants who are key employees are available to all other participants. A plan shall not fail to meet the requirements of paragraph (2)(B) merely because the amount of life insurance on behalf of the employees under the plan bears a uniform relationship to the total compensation or the basic or regular rate of compensation of such employees. For purposes of this subsection, the term “key employee” has the meaning given to such term by paragraph (1) of section 416(i). Such term also includes any former employee if such employee when he retired or separated from service was a key employee. This subsection shall not apply to a church plan maintained for church employees. section 414(e) shall be applied by substituting “section 501(c)(3)” for “section 501” each place it appears, and an organization described in section 170(b)(1)(A)(ii) above the secondary school level (other than a school for religious training), an organization described in section 170(b)(1)(A)(iii), and an organization described in section 501(c)(3), the basis of the exemption for which is substantially similar to the basis for exemption of an organization described in subclause (II). To the extent provided in regulations, this subsection shall be applied separately with respect to former employees. For purposes of this section, the term “employee” includes a former employee. Subsection (b)(3) and section 72(m)(3) shall not apply in the case of any cost paid (whether directly or indirectly) with assets held in an applicable life insurance account (as defined in section 420(e)(4)) under a defined benefit plan. December 31, 1987 , or the date which is 3 months after the date on which the Secretary of the Treasury or his delegate issues such regulations as are necessary to carry out the provisions of section 89 of the Internal Revenue Code of 1986 (as added by this section), or December 31, 1988 . the date on which the last of such collective bargaining agreements terminates (determined without regard to any extension thereof after February 28, 1986 ), or January 1, 1991 . In the case of a plan described in section 223(d)(2) of the Tax Reform Act of 1984 [ section 232(d)(2) of Pub. L. 98–369 , set out as an Effective Date of 1984 Amendment note below], such plan shall be treated as meeting the requirements of section 89 of the Internal Revenue Code of 1986 (as added by this section) with respect to individuals described in section 223(d)(2) of such Act. An employer may elect to disregard such individuals in applying section 89 of such Code (as so added) to other employees of the employer. In the case of a church plan (within the meaning of section 414(e)(3) of the Internal Revenue Code of 1986) maintaining an insured accident and health plan, the amendments made by this section [enacting section 89 of this title and amending this section and sections 105, 106, 117, 120, 125, 127, 129, 132, 414, 505, 6039D, and 6652 of this title] shall apply to years beginning after December 31, 1988 . The amendments made by subsection (d)(2) [amending sections 3121 and 3306 of this title and section 409 of Title 42 , The Public Health and Welfare] shall apply to taxable years beginning after December 31, 1983 . If an educational organization described in section 170(b)(1)(A)(ii) of the Internal Revenue Code of 1986 makes an election under this paragraph with respect to a plan described in section 125(c)(2)(C) of such Code, the amendments made by this section shall apply with respect to such plan for plan years beginning after the date of the enactment of this Act [ Oct. 22, 1986 ].” Except as provided in paragraph (2), the amendments made by this section [amending this section and section 83 of this title ] shall apply to taxable years beginning after December 31, 1983 . to any group-term life insurance plan of the employer in existence on January 1, 1984 , or to any group-term life insurance plan of the employer (or a successor employer) which is a comparable successor to a plan described in clause (i), In the case of any plan which, after December 31, 1986 , is a discriminatory group-term life insurance plan (as defined in section 79(d) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]), subparagraph (A) shall not apply in the case of any individual retiring under such plan after December 31, 1986 . For purposes of determining whether a plan described in subparagraph (A) meets the requirements of section 79(d) of the Internal Revenue Code of 1986 with respect to group-term life insurance for former employees, coverage provided to employees who retired on or before December 31, 1986 , may, at the employer’s election, be disregarded. For purposes of subparagraph (A), a plan shall not fail to be treated as a comparable successor to a plan described in subparagraph (A)(i) with respect to any employee whose benefits do not increase under the successor plan.”