Everything you want to know about

Employer-Employee Insurance

What is employer-employee Insurance?

The Employer employee insurance policy plan is a structure where the company or the employer buys insurance where the employee is benefitted. This insurance policy is very significant and relevant in today’s work environment where the employer-employee relationship is very important to run a company. At times, when retaining an employee has become difficult, plans like this help the employer to please the employee with benefits of this policy.

Employer employee insurance comes in handy in cases of companies run by promoters where the promoter wishes to have his insurance expenses taken care of by the company. Employer-employee insurance policy is more often than not confused with Keyman Insurance. But the truth of the matter is they are two different insurance policies. Keyman insurance is a term life cover but employer-employee policies can be used to cover any type of insurance. Keyman Insurance benefits the employer as he/she is being paid the insurance premium to cover his employee so the premium payment is considered as business expense.

What are the benefits of this insurance policy?

Employer-employee insurance helps reduce the attrition of the firm and satisfies employees on a personal level. It is, in all ways, an inspiring factor for the employee to know that his/her employer is concerned about them and insures their lives. This step also helps build a stronger employer-employee bond within a workspace since the employee is able to receive the benefits of the insurance without having to pay a penny.

Group of employees

This also makes the employee want to work for that company for longer than usual. The maturity amount of the insurance or benefits after death are completely tax free and belongs only to the employee. Employer-employee allows the employer to buy any kind of insurance under this policy. This policy more often used to insure lives of employees.

Who can be insured under this insurance cover?

This insurance policy can be availed by either a sole proprietor or any corporate firm or a legal company with a minimum of 5 employees. The insurance cover can be used to cover all the employees with one single cheque drawn by employer.

Employees of Indian citizenship who are on a payroll with the corporate or any small-scale company are eligible to be insured under this insurance policy. Non-Resident Indians are also eligible to be insured under insurance cover under the condition that the employer has a registered office in India. The age restrictions for the employee to be insured should be in between 18 and 59.

How can SMEs apply for this insurance?

An employer has the freedom to evaluate an employee’s worth based on their qualification, previous work record of the employee, CTC and experience. The employer has to prepare a proposal form declaring that they have decided to opt the Employer-Employee insurance policy and that they will be paying the premiums on behalf of the employees. This form has to be signed by the authorised signatory of the employer which is supposed to carry the seal and stamp of the company.

The proposal form should also enlist the names of the employees whose lives are being insured along with the details of the insurance plan like the sum insured and the term period. The nomination form and assignment form should be signed and submitted at the proposal stage after duly filling it.

How is the employer beneficial from the policy?

This insurance goes on to say that the employer cares for the employee in more than one way and so his/her life is insured as a mark of gratitude and acknowledgement of their contribution to the company. In addition to the personal bonding between the employer and employee, this insurance policy has quite a few advantages that both employer and the employee will benefit from.

How is employee beneficial from the policy?

  • This insurance policy provides security cover to the employees in case of critical illnesses, accident, disability due to accident or premature death.
  • The employee is entitled to receive the benefits of the insurance cover including the maturity sum money which is tax free.
  • The next of kin receives the insurance claim, in case of the employee’s unfortunate death. This helps the family of the deceased employee with financial aid in his absence.
  • Employees have the advantage of claiming the cover without having to pay for it.