Short answer: No. A 2% S corporation shareholder is not treated as an employee for this exclusion, so the entire cost of the group life coverage provided to them is wages, not just the cost over $50,000.
For fringe benefit purposes, a more-than-2% S corporation shareholder is treated like a partner. The employer includes the cost of all group term life coverage provided to that person in boxes 1, 3 and 5 of the W-2, and it is subject to Social Security and Medicare tax. Federal income tax withholding and FUTA are not required on it.
Ownership counts directly or indirectly, on any day of the tax year, so family attribution can make a relative on payroll a 2% shareholder too. Have the business’s tax preparer confirm who falls in this category before setting up payroll.