Employer Employee Insurance

Employer employee insurance is a critical component of the corporate benefits package in India. This insurance scheme not only provides financial security to employees but also enhances the overall work environment, boosting morale and productivity. 

What is an Employer Employee Insurance Scheme?

An employer employees insurance scheme is a group insurance policy that an employer provides to its employees. It is a contractual arrangement where the employer buys insurance policies for the benefit of the employees, providing them with life cover, health cover, or a combination of both. The insurance can also be structured to cover the employees’ families, offering comprehensive protection.

This scheme is especially popular in India due to its dual benefits, including financial security and tax benefits for employers. By offering such a scheme, employers can attract and retain top talent, as it is seen as a significant value addition to the standard salary package.

How Does an Employer and Employee Insurance Scheme Work?

An employer employee insurance scheme works on a group basis, where the employer purchases a single policy that covers all eligible employees. The premium for this policy can be paid entirely by the employer, or it can be shared between the employer and the employees, depending on the company’s policies.

The sum insured under this scheme is usually predetermined and is based on factors such as the employee’s salary, designation, or length of service. Upon the occurrence of an insured event, such as death, critical illness, or hospitalisation, the insured employee or their beneficiaries can claim to receive the financial benefits as per the terms of the policy.

The coverage and benefits provided under this scheme can vary significantly based on the policy chosen by the employer. Some employers may opt for basic life insurance coverage, while others might offer more comprehensive plans that include health insurance, accidental death benefits, and coverage for critical illnesses.

Group Insurance Scheme for Employees – Eligibility

Eligibility for group insurance under the employer employees insurance scheme is generally defined by the employment status of the individual. Full-time employees, and sometimes part-time or contractual workers, may be eligible for coverage. Here are some common eligibility criteria:

1. Full-time Employment: Most group insurances for employees are available only to full-time employees. This means that the employee must be on the company’s payroll and meet the employer's minimum work-hour requirements.

2. Tenure of Service: Some employers may stipulate that only employees who have completed a certain service period, such as three or six months, are eligible for insurance coverage.

3. Designation or Job Role: In some cases, the level of coverage provided may vary based on the employee’s designation or job role. Senior employees may receive higher coverage compared to entry-level workers.

4. Health Requirements: Though group insurance for employees typically does not require individual medical underwriting, some insurers might have basic health requirements or exclude pre-existing conditions.

5. Family Coverage: Employees may also have the option to include their dependents, such as spouses and children, under the policy. The eligibility criteria for family members are usually defined by the insurer and the employer.

What is Covered Under the Group Insurance Policy for Employees?

Group insurance for employees can offer a broad range of coverage options depending on the specific policy chosen by the employer. Common coverage features include:

1. Life Insurance: Provides a death benefit to the beneficiaries of the insured employee in the event of their death during the term of the policy. This is a crucial benefit that offers financial security to the family of the deceased.

2. Health Insurance: Covers medical expenses incurred by the insured employee or their covered family members for hospitalisation, surgeries, and other treatments. This can include both cashless and reimbursement facilities at network hospitals.

3. Accidental Death and Dismemberment (AD&D): This coverage provides benefits in the event of accidental death or serious injuries resulting in the loss of limbs, eyesight, or other critical functions.

4. Critical Illness Insurance: Offers a lump sum benefit upon the diagnosis of specified critical illnesses like cancer, heart attack, or stroke. This helps employees cover the high costs of treatment and recovery.

5. Disability Insurance: Provides income replacement if the insured employee becomes disabled and is unable to work due to illness or injury.

6. Maternity Benefits: Some group health insurance policies may also include maternity benefits, covering pre-natal, delivery, and post-natal expenses for female employees.

7. Outpatient Care: Coverage for outpatient consultations, diagnostic tests, and prescribed medicines. This is often an add-on feature that employers can opt for.

8. Wellness Programs: Many insurers now offer wellness benefits under group insurance policies, including health check-ups, mental health support, and fitness programs to promote overall well-being.

What is Not Covered Under the Group Insurance Policy for Employees?

While group insurances for employees offer extensive coverage, there are certain exclusions and limitations that employees should be aware of. Common exclusions under group insurance policies include:

1. Pre-existing Conditions: Some group health insurance policies may exclude coverage for pre-existing conditions or impose a waiting period before coverage for such conditions becomes active.

2. Non-Work-Related Injuries: Injuries or illnesses resulting from activities outside the scope of work, especially if they involve high-risk activities or illegal actions, may not be covered.

3. Self-inflicted Injuries: Any harm that an employee causes to themselves intentionally is typically excluded from coverage.

4. Substance Abuse: Illnesses or injuries arising from the abuse of alcohol, drugs, or other substances are generally not covered.

5. Cosmetic Procedures: Treatments or surgeries performed for aesthetic purposes, such as cosmetic surgery, are usually not covered unless medically necessary.

6. Maternity Expenses for Dependent Children: While maternity benefits might be available for employees and their spouses, they usually do not extend to dependent children.

7. Alternative Treatments: Some policies might not cover alternative treatments such as Ayurveda, Homeopathy, or other non-allopathic therapies unless explicitly included in the policy terms.

8. Experimental Treatments: Any medical procedures or treatments that are experimental or not approved by regulatory bodies are generally excluded.

9. War and Terrorism: Injuries or losses arising from war, terrorism, or acts of rebellion are typically excluded from coverage.

Types of Arrangements in the Employer Employee Insurance Scheme

Employer employee insurance schemes can be structured in various ways to meet the needs of both the employer and the employees. Some common types of arrangements include:

1. Pure Group Insurance: In this arrangement, the insurance policy is purely a group term plan. It provides life or health coverage to the employees for a specified period. The benefits are typically restricted to the duration of employment, and the policy is not transferrable once the employee leaves the organisation.

2. Voluntary Group Insurance: In this model, employees have the option to opt in for additional coverage beyond what the employer provides. The employees may bear the premium for this extra coverage, and they can choose the coverage amount based on their individual needs, giving them a sense of control over their insurance.

3. Keyman Insurance: This is a special arrangement where the employer takes a policy on the life of key employees whose sudden demise could adversely affect the organisation. The organisation is the policyholder and beneficiary, and the employer pays the premiums.

4. Employer-Owned Insurance: Under this arrangement, the employer owns the policy, pays the premiums, and is the beneficiary of the policy. This is often used in cases where the insurance is taken out as part of a deferred compensation arrangement or to cover potential losses due to the death of a key employee.

Employer Employee Scheme – Benefits for Employees

Employer and employee insurance schemes offer a plethora of benefits to employees, ensuring their financial security and peace of mind:

Financial Security

One of the primary benefits of this scheme is the financial security it provides employees and their families. In the event of an untimely death, disability, or illness, the policy offers monetary compensation that can help cover medical expenses and funeral costs and provide for the family’s future needs.

Health and Well-being

Health insurance coverage under this scheme ensures that employees have access to quality healthcare without the burden of hefty medical bills. It covers hospitalisation expenses, surgeries, and sometimes even regular health check-ups, promoting overall well-being.

Employer-Provided Premiums

In many cases, the employer pays the premiums for the group insurance policy, offering employees valuable coverage at no direct cost. This adds a significant value to their compensation package.

Tax Benefits

Under Section 80D of the Income Tax Act, employees can claim tax benefits on the premium paid for health insurance. This reduces their taxable income, offering additional financial savings.

Peace of Mind

Knowing that they and their families are covered in case of any unfortunate event gives employees peace of mind, allowing them to focus on their work without worrying about financial uncertainties.

Customisable Coverage

Employees in certain schemes can opt for additional coverage based on their individual needs, allowing them to tailor the insurance plan to better suit their personal and family requirements.

Group Mediclaim

Employees benefit from group mediclaim policies that cover a wide range of medical expenses, including daycare procedures, pre and post-hospitalisation expenses, and even maternity benefits.

Employer and Employee Insurance Scheme – Benefits for Employers

Employer employee insurance schemes are not just beneficial for employees; they also offer numerous advantages to employers:

Financial Protection for the Company

In the case of keyman insurance, employers are protected against the financial impact of losing a key employee. The compensation received from the insurance can help cover the cost of recruiting and training a replacement or offset the loss in revenue.

Tax Benefits

Employers can avail of tax deductions on the premiums paid for group insurance policies under the Income Tax Act, reducing their taxable income. This makes the scheme not only beneficial but also cost-effective.

Compliance with Regulations

In some industries or regions, offering employee insurance might be a legal requirement. By implementing such schemes, employers ensure compliance with relevant labour laws and regulations, avoiding potential legal issues.

Improved Employer Brand

Companies offering comprehensive employee benefits, including insurance coverage, are often considered responsible and caring employers. This enhances the company’s brand image, making it more appealing to current and potential employees.

Simplified Administration

Group insurance policies simplify the administration of employee benefits. Since the coverage is provided under a single policy, it reduces the administrative burden on HR departments, allowing them to focus on other critical tasks.

Employer Employee Insurance Scheme: Tax Benefits

Some of the significant for employer employee insurance tax benefit under Indian tax laws include:

Tax Benefits for Employers

1. Premium Payments: Premiums paid by the employer for group insurance policies are considered business expenses and are eligible for tax deductions under Section 37(1) of the Income Tax Act.

2. Keyman Insurance: Premiums paid for keyman insurance are also tax-deductible as a business expense, provided the policy meets the criteria set by the Income Tax Department.

3. Gratuity and Superannuation Contributions: Employers can claim tax deductions on contributions made towards group gratuity and superannuation schemes, reducing their overall tax liability.

Tax Benefits for Employees

1. Section 80C: Employees can claim tax deductions on premiums paid for life insurance policies under Section 80C of the Income Tax Act up to a limit of ₹1.5 lakh per year.

2. Section 80D: Health insurance premiums paid by employees can be claimed as deductions under Section 80D, up to a limit of ₹25,000 for individuals and ₹50,000 for senior citizens.

3. Tax-Free Payouts: The death benefit received by beneficiaries under the life insurance policy is exempt from tax under Section 10(10D), provided the premium does not exceed 10% of the sum assured.

Tax Implications of Maturity Benefits

In cases where the policy has a maturity benefit, the proceeds may be subject to tax if the premium exceeds 10% of the sum assured. However, policies that comply with the criteria set by the Income Tax Department enjoy tax-exempt status on maturity proceeds.

Tax Benefits on Keyman Insurance

The proceeds received from keyman insurance are taxable as business income for the employer. However, these can be offset against business expenses, reducing the overall tax burden.

How to Buy Employer Employee Insurance Online from Niva Bupa

Purchasing employer employee insurance online from Niva Bupa is a streamlined process designed to offer convenience and comprehensive coverage. Here’s how you can go about it:

Steps to Purchase

1. Visit the Niva Bupa Website: Start by visiting the official Niva Bupa website, where you can explore various group insurance policies tailored for employer employee coverage.

2. Choose the Right Plan: Browse through the available plans and select the one that best suits the needs of your employees and your budget. Niva Bupa offers a range of options, from basic life coverage to comprehensive health insurance.

3. Customise Your Coverage: Depending on the size and nature of your organisation, you can customise the policy to include additional benefits such as critical illness coverage, maternity benefits, or higher sum assured for key employees.

4. Get a Quote: Use the online tools to get an instant quote based on your coverage preferences and the number of employees to be covered.

5. Fill in Details: Provide the necessary details about your organisation and employees, including their age, job roles, and any specific health information required by the insurer.

6. Review and Purchase: Review the policy terms, coverage details, and premium amounts before proceeding to payment. Ensure that you understand the inclusions and exclusions of the policy.

7. Online Payment: Complete the purchase by making an online payment through secure payment gateways. You will receive a confirmation and the policy document via email.

8. Policy Issuance: Once the payment is processed, the policy will be issued, and the coverage will begin as per the terms agreed upon.

Benefits of Buying Online

1. Convenience: Purchasing online allows you to compare different policies, customise coverage, and complete the process from the comfort of your office or home.

2. Instant Coverage: Online purchase ensures quicker processing and immediate issuance of the policy, providing instant coverage to your employees.

3. Transparency: The online platform offers clear information about the policy terms, exclusions, and premium costs, ensuring transparency.

4. Customer Support: Niva Bupa offers robust customer support to assist with any queries or issues during purchase.

5. Post-Purchase Support

After purchasing the policy, Niva Bupa provides ongoing support for policy management, including adding or removing employees, claim processing, and policy renewal. Employers can access their policy details and make adjustments through the online portal.