Employer-Employee Insurance Policy

To run the smooth operation of any organization, the Company should prioritize the welfare of its employees. Healthy employees more effectively contribute to building a strong and efficient organization. A group insurance plan is important in supporting employees and their families during medical emergencies to safeguard their physical well-being.

 Employer-employee insurance also called group health insurance, is a policy widely adopted by several companies across the country.

What is Employer-Employee Insurance

Employer-employee Insurance policy is a scheme in which a company offers life, medical, or personal accident insurance to its employees and their families. The employer pays the premiums for this insurance plan, while the employees and their dependents are the beneficiaries. The premium amount is deducted from the employee’s Cost to Company (CTC) and is presented as a workplace benefit by the company.

      In April 2020, the Indian government recommended that workplaces in India should provide a workplace compensation policy to their employees.

What is Covered under Employer-Employee Policy?

This Insurance policy offers comprehensive coverage that includes the following:

Life Insurance: This policy provides financial security for employees and their dependents. In the unfortunate event of the employee's untimely demise, the insurance company disburses a sum, based on the chosen coverage, to the employee's beneficiaries.
Medical Insurance: It covers employees' hospitalization expenses. Moreover, this policy extends its protection to the employee's family members if included as dependents by covering medical bills.
Accident Benefit: This policy helps employees in case of heightened risks of injury at the workplace, such as those in construction management or security services. This provides support in the event of disability or death caused by an accident.

Eligibility Criteria for Employer-Employee Policy

Eligible entities for group health insurance include private and public companies, partnership firms, MSMEs, and sole proprietorships.
A minimum of seven employees is required to purchase employee-employer insurance covering personal accidents and medical expenses.
For a life insurance plan, a minimum of ten employees is necessary.
Individual employees must be legally employed by the company.
The employee age range for coverage is 18 to 65.
NRIs and foreign workers employed by an MNC or company in India are also eligible for this insurance plan.
What are the Benefits of Employer-Employee Insurance to Employer?

Here are the benefits of an employer-employee insurance plan to a company.

Increased Workforce Productivity:

  • Quality healthcare coverage for employees and their families leads to better health and well-being.
  • Healthier employees are more efficient and productive.

Talent Attraction and Retention:

  • Attractive insurance benefits make your company more appealing to potential employees.
  • This Insurance plan helps retain valuable talent.

Lower Attrition Rate:

  • It reduces employee turnover as they are less likely to leave for better benefits elsewhere.
  • Saves money spent on employee training and onboarding.

Startup Growth and Success:

  • Offers a competitive edge for startups in attracting and retaining top talent.
  • Facilitates building a skilled and dedicated team for faster company growth.
Tax Benefit of Employer-Employee Insurance Policy

In accordance with Section 37(1) of the Income Tax Act, 1961, organizations have the opportunity to apply tax exemption for the premiums they pay for their E-E insurance plan. Employers can categorize these premiums as a business expense and reduce their company’s taxable profits.

Employees, too, enjoy tax benefits under Section 80C of the Income Tax Act, despite the fact that the premiums are paid by their employer. They can claim income tax exemptions and can increase their savings.

Furthermore, when the policy is assigned to the employee, any maturity amount received is not subject to taxes. Section 10D of the Income Tax Act exempts the maturity amount from taxation in this case.

However, it should be noted that if the policy is not assigned to any employee and the maturity amount goes to the company then it becomes taxable.

How Employer-Employee Insurance Works?

This insurance policy provides better healthcare coverage for employees and their family members. Here’s how it works:

Initiation by the Employer: The employer or company takes the initiative to provide insurance coverage to their employees. They typically fill out the necessary paperwork and pay the policy premiums.
Two Types of Arrangements:

Type A (Non-Contributory Scheme): In this plan, the employer solely bears the cost of insurance premiums, including coverage for the employee and their family members. Employees are not required to contribute to the policy.

The employer is the proposer of the insurance policy, and the employee is the insured. The policy is assigned to the employee for a minimum period to prevent misuse, such as surrendering the policy or taking a loan against it.

Type B (Contributory Scheme): Under this plan, employees are required to share the cost of insurance premiums. The employer deducts a portion of the premium from the employees’ total compensation package. Both the employer and employees are policyholders in this case.

The employee becomes the proposer, and both the employer and employees are policyholders. Policy assignment is not required in this case.

Life Insurance:

If life insurance is included in the policy, specific forms, such as Form No. 340 or Form No. 300 need to be filled.

The main goal of this insurance scheme is to ensure that employees and their families can get medical and financial support in times of need. This becomes particularly important in a country like India, where a significant portion of the population lacks health insurance, and rising healthcare costs can lead to financial burdens.

Contact Us Today

Don’t wait to enhance your business’s financial security and employee satisfaction. Contact Money Marche today to learn more about our Employer-Employee Insurance options and get started on a customized plan that suits your business needs. Together, we can protect your organization and its invaluable workforce.

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FAQ

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Employer-employee insurance is a benefit where an employer provides insurance coverage to their employees, health, and other types like life or disability insurance, as part of their compensation package.

Employer-employee insurance serves as a reward or extra benefit apart from salaries to motivate employees and also for financial and social security for employees and their dependents.

This policy provides financial protection for both employees and their family members. It covers accident injuries, medical emergencies, hospitalization, and other specified expenses, depending on the policy.

Insurance premiums paid by employers for group medical insurance are not taxable for the employer, as they are categorized as an 'employer entitlement' under the Insurance Regulatory and Development Authority Act, 1999.

Employees can file claims by contacting Money Marche directly or through their employer's HR department. Claim procedures and requirements may differ for different types of insurance within the policy.

Most policies have an annual open enrollment period during which employees can make changes to their coverage. However, certain life events (e.g., marriage, birth of a child) may allow for mid-year changes.

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