Employer employee insurance allows companies to purchase life insurance policies on their employees. This provides financial support to the employee's family if the employee dies suddenly. It benefits both employees and employers. For employees, it offers financial security and income for their families or retirement. Employers benefit from increased employee loyalty and reduced costs of replacing employees. All individual insurance plans are allowed under employer employee insurance. The maximum insurance amount depends on the employee's age and income. Employers can insure employees as long as the employee's ownership in the company is less than 5%. Premiums paid by employers are treated as a tax deductible business expense.

1. Employer Employee Insurance

2. What is Employer Employee
Insurance?
Under Employer Employee insurance scheme the
company purchases life insurance on the lives
of employees, which will provide money to their
family members in case of sudden death.

3. Why Employer Employee
Insurance?
Benefits to the Employees
Offers sense of financial security for the
employee.
 Will provide income to their families in case
of premature death.
 Benefits of the policy can be used as fund for
retirement.
 Acts as an additional service benefit.

4. Benefits to the Employers
 Develops employee loyalty
 Reduces attrition.
 Delay and financial costs incurred in recruiting
and training new employees can be avoided by
retaining current employees.
Why Employer Employee
Insurance?

5. Plans Allowed Under Employer
Employee Insurance?
All plans allowed to employees under individual
insurance are allowed.
Maximum amount of insurance allowed
Will depend upon the age & income of the employee.
 Premiums payable by the employer will also be
considered as income for purpose of maximum
insurance.

6. Eligibility conditions for Employer
Employee Insurance?
 No restriction for companies/ firm proposing on the lives
of the employees.
 Employer has to assign the policy in favour of
employee within reasonable time.
 Combined shareholding of the employee and his/her
relatives such as spouse, children, sons-in-law,
daughters-in-law, parents, brother or sisters in the
employer company should not exceed 5%.

7. Tax Benefits
 Employee can claim tax rebate u/s 80C for the
premiums paid by the employer.
Maturity proceeds are tax-free for the employee
Premiums paid by the company are treated as a
perquisite in the hands of the employee.
Premiums paid by the company will be eligible to qualify
as business expenses under Sec.37 (1) of the Income
Tax Act.