how does pre-tax deductions work and how does it save money?

Question

I purchased group term life insurance through my employer. I was told it will save me a lot of money since it will be pre-tax deducted from my paycheck.

In: 3

Answer 1

Note that buying something pre-tax ONLY saves you money if you already wanted/needed the thing. Buying insurance pre-tax won’t save you money if you don’t want the insurance, it’s just cheaper than if you bought it post-tax.