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Features
Ref. No. KLI/22-23/E-BB/492
An employer-employee insurance scheme is a comprehensive policy in which employers procure coverage for their workforce, encompassing health, accident, and life insurance.
You’re sitting in a cozy café, and you ask me about employer-employee insurance schemes. It’s a topic that might sound complex at first, but once you understand it, you’ll see how beneficial it can be for both employers and employees.
An employer-employee insurance scheme is a type of insurance policy in which an employer purchases coverage for its employees, providing financial protection against various risks. This scheme is designed to safeguard the interests of employees and employers alike, offering benefits that range from health coverage to life insurance and disability benefits.
The employer-employee insurance scheme provides health coverage sponsored by the employer for all the employees. Employers can get a Group Medical Cover (GMC) or a Group Personal Accident (GPA) cover for their employees. Often, the GPA policy includes an additional Group Health Insurance option.
Generally, the employer covers the premiums for each enrolled employee under the policy. The primary goal of an employer-employee insurance policy is to provide financial assistance to team members in the event of medical emergencies, serving as a valuable employee benefit offered by the company.
Employer-employee insurance schemes offer significant advantages to employers and employees, enhancing workplace welfare and financial security. Here’s a detailed exploration of the benefits for both parties:
Employers gain several advantages by implementing an employer-employee insurance scheme:
Enhanced Employee Satisfaction
Providing comprehensive insurance coverage demonstrates a commitment to employee welfare, boosting morale and satisfaction levels within the workforce.
Improved Recruitment and Retention
Competitive insurance benefits can attract top talent and retain skilled employees, reducing turnover rates and associated recruitment costs.
Financial Stability
Insurance coverage helps mitigate unexpected financial liabilities arising from employee health emergencies or accidents, safeguarding the company’s financial stability.
Tax Benefits
Contributions made towards employee insurance premiums often qualify for tax deductions, providing financial incentives for employers.
Legal Compliance
Offering insurance coverage may fulfill legal obligations under labor laws or regulatory requirements, ensuring compliance and avoiding penalties.
Employees derive numerous benefits from being covered under an Employer-Employee Insurance Scheme:
Comprehensive Health Coverage
Access to healthcare benefits, including medical treatments, hospitalization, and outpatient care, ensuring timely and quality medical assistance without financial burden.
Financial Security
Insurance coverage protects against medical expenses, disabilities, and unforeseen accidents, alleviating financial stress for employees and their families.
Peace of Mind
Knowing they are covered by insurance in emergencies offers peace of mind, allowing employees to focus on their work and personal responsibilities.
Enhanced Well-being
Improved access to healthcare services promotes better physical and mental well-being among employees, contributing to higher productivity and job satisfaction.
Family Support
Insurance benefits sometimes extend to employees’ families, offering additional security and support during critical times.
Understanding the eligibility criteria is essential for employers considering this beneficial provision for their workforce.
Employer
Under Section 17(3) of the Income Tax Act, premiums paid by employers for employees’ health insurance are categorized as “Profit in lieu of Salary.” Therefore, employers can deduct these premiums as business expenses to benefit from tax savings.
Employee
Employees who contribute towards the premium payment can also benefit from tax exemptions under the Income Tax Act of India. Additionally, employees’ monthly premiums for opted top-up plans qualify for tax benefits per the IT Act.
The employer-employee insurance scheme stands as a cornerstone of modern employee benefits strategies, offering invaluable protection and security to employees while providing cost-effective solutions for employers. Organizations can effectively enhance employee welfare, promote organizational stability, and achieve sustainable growth in today’s competitive marketplace by understanding these schemes’ types, benefits, eligibility criteria, and tax implications.
1
Yes, employer-employee insurance can be customized to fit specific needs by choosing from various coverage options such as health insurance, personal accident insurance, life insurance, and disability insurance. Employers can tailor the insurance plan to meet the diverse needs of their workforce.
2
The premium for employer-employee insurance is typically determined based on factors such as the size of the employee group, the chosen coverage options, the age and health profile of employees, industry risk factors, and past claims history. Insurers assess these variables to calculate a premium that reflects the perceived risk and coverage requirements.
3
Yes, there are tax benefits associated with employer-employee insurance. Premiums paid by employers are often tax-deductible as business expenses under relevant tax laws, reducing the company’s taxable income. Employees may also enjoy tax exemptions on their contributions towards insurance premiums, enhancing the attractiveness of the insurance scheme.
4
Employees’ coverage under the employer-employee insurance policy typically ceases if employees leave the company. However, many insurance policies offer options for converting the group policy into individual policies or providing portability options where employees can continue coverage independently, albeit at their own expense.
5
Yes, employers can provide insurance coverage for retired employees, depending on the terms outlined in the insurance policy and company policies. Some insurance plans offer extended coverage options for retirees, ensuring continued health and financial security post-retirement.
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Features
Ref. No. KLI/22-23/E-BB/2435
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
