Employer Employee Employer Employee InsuranceInsurance

Employer Employee Insurance : Employer Employee Insurance :

Employer sponsored fringe benefits are a valuable part of a worker's compensation.

As the name suggests, here insurance plan is taken by the employer in the name of its employees with the objective of providing additional benefits in order to retain the services of the experienced staff.

Benefits of Employer Employee InsuranceBenefits of Employer Employee InsuranceBenefits to EmployersBenefits to Employers

• This is employer sponsored fringe benefit which is valuable part of compensation.

• Life and health both can be covered in one plan.• In the event of any unfortunate demise or disability the employer can pay

money out of the claim received from the insurance company instead of company’s account.

• They become attractive array of benefits as incentives to recruit and retain

qualified employees. • It helps in creating employer’s loyalty.• This makes the employer more attractive in the increasingly competitive

market for quality people. • Employer also enjoys tax rebate on the premium paid.

Benefits to EmployersBenefits to Employers

• They provide workers with long and short-term security against premature death, illness and accident and they offer a sense of leisure as well as a measure of freedom from worry

at retirement. • Employee/Nominee gets claim in the event of Death, illness,

disability.• In addition to benefits from the company on retirement,

maturity claim from insurance also comes to them.• Employees are safe from the botheration of buying and

administering these plans.• They also result in tax free income to the employees.

Scheme B – Under this scheme the employer is the proposer and owner of the policy and employee is the life insured.

In this case the employer retains the right to assign the benefits of the policy on his retirement or resignation from the company.

Administrative Requirements – Application form to be signed both by the employer and employee.

Age proof, income proof, residential proof and special reports if any to be attached for the life insured i.e., employee in this case.

Non Contributory Plans Non Contributory Plans

Tax EligibilityTax Eligibility 1. Premium paid by the employers are taken as

business expense and is thus tax free.

2. The employees pay no tax on maturity u/s 10[ 10(D)]

3. Premium paid by employer is considered as a

perquisite for employee hence taxable.

Documents required• Application form and Assignment form signed and stamped

by the employer in the space meant for the proposer.• Age proof of the Person to be insured. • KYC requirements as applicable: of the respective entities,

as mentioned above.• Certificate stating the Date of Incorporation.• Address of the company via letter on company’s letterhead

or any other document conveying the same. • Draft of Board Resolution on Company’s letterhead• Rules of Scheme on Company’s letterhead

Policy Level Restrictions :Policy Level Restrictions :

1. All plans and riders are allowed.

2. Further assignment by employee is not allowed.

3. Employee should not hold more than 5 % stakes in the company.

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