Employer Employee Insurance

Employer Employee Insurance

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What Employer Employee Insurance is?

Employer-Employee Insurance Scheme is an insurance arrangement between the two, where, the employer purchases an insurance policy for the employee. This arrangement is based on the principle that the employer has an insurable interest in his/her employees. The interesting fact is that both the employee and the employer is benefited through this arrangement.

The success of a business depends largely on how its men perform. However, talented employees are often in search of better job opportunities. It is very very tough to retain them for longer periods. The shortage of skilled workforce only adds to this problem.

Therefore, as a business owner, employee retention should be our topmost priority. We need to take adequate steps to keep our employees motivated and happy while working for our organisation. One of the tools that we can use to achieve this objective is the Employer-Employee Insurance scheme. Apart from employee retention, it can also help us save on taxes.

Employer-Employee insurance scheme – who is eligible?

Any Private Limited Company, having Individual share <51% and Family Share <71%. (Family means, Husband, Wife and Minor Children), Parents and Major children are not counted as family member for Employer Employee Insurance.
Any Public Limited Company.
Any Proprietary Firm, Partnership Firm.
Any Trust, NGO or Society. But they can buy EE Insurance only for Employees, Not for volunteers.
Even a loss-making company can get the benefit of this scheme.
All plans except child plans and pension plans are allowed for this scheme.

Benefits for Employer

1. Tax Deferment on profit.
2. Employee retention, because employee feels Honored, more secure and rewarded. He became more loyal and motivates other employees too.
3. Employer Employee Insurance thus helps to minimize employee attrition rate.
4. The employer is entitled to get exemptions for the premium amount (whether it is under single or non-single mode) u/s 37(1) of Income Tax act as business expenses of the firm.
5. If Employee is major shareholder in company, he can plan his retirement, business expansion planning and investment planning at a tax effective rate.