Your business offers life insurance that can be purchased in $1,000 increments. The insurance vendor gives you the following rate schedule per thousand dollars of coverage purchased.

Employees under 30 pay $.20 per thousand per month; employees 30 - 40 pay $.22 per thousand per month; and employees 40 - 50 pay $.30 per thousand per month.

Carl, age 27, wants to purchase $5,000 of life insurance. He will have to pay 5 times $.20 = $1.00 per month for his insurance. Janet, 30, will have to pay 5 times $.22 = $1.10 for the same amount of coverage.

Sports Heaven, Inc., pays the premiums on a $120,000 group-term life insurance policy on Karen, who is 46 years old. The monthly rate for employees in the 45-49 age group under the plan is $.29 per thousand. If Karen makes no contribution toward the plan, the cost of the $70,000 coverage ($120,000 minus the $50,000 exclusion) counts as taxable income for Karen. The amount included in taxable income would be $243.60 for the year (70 [thousand-dollar increments] times $.29 [per thousand] times 12 [months]).

If Karen contributes $10 per month toward the coverage, then the taxable amount included as gross income for the year is $123.60 ($243.60 minus $120 [Karen's contribution]).