The reason this is the most common employer provided group life benefit is because this is the amount and type of life insurance coverage that an employer can offer to their employees without the premiums paid being considered as income to the employee. Section 79 of the Internal Revenue Code sets these limits. With this type of arrangement the employer pays the policy premiums, deducts them as a business expense, does not add the premium to the employee's W2, and the death benefit is still income tax free to the beneficiary.