Employer Employee Insurance

Scheme

Employer Employee Insurance an overview

Employer employee insurance is a welfare measure were by an employer with
progressive outlook buys life insurance on the life of all or selective
employees.

Employer Employee Insurance : Benefits

Employer employee benefits are:
For Employer:
Employee retention
Tax Planning
Estate planning
For Employee:
Building corpus for retirement
Financial security through risk management
Future financial planning

Employer Employee Needs

Employer Employee
needs

Long term need

1. Retention of X no. of Yrs
2. Retirement Benefit
3. Building personal capital

Short term need

1. 10 years or less
2. Money for emergencies

Key Benefits of Employer Employee

1.

2.
3.
4.
5.
6.

Life Coverage of Human Life Value

a) How to save unearned income for family
b) Long term Savings and Protection
Retirement benefit/Superannuation benefit
Tax benefit in the long run
Money for emergencies
Estate planning tool
Long term Savings and Protection

How does Employer Employee Insurance works

Employer pays the premium and claim premium as revenue expenditure u/s
37(1)(Ref : Circular 762)
Employer has insurable interest under section 2(11) of Insurance Act
Employer Employee Scheme
Conditions
Proposer-

Employer

Payor-

Employer

Owner-

Employer

Life to be Insured Employee

Treatment of Money
At the time of premium
payment.
Business Expense U/S 37(1) of
IT Act 1961.
All receipts under employer
employee in the hands of employer
will be treated as Business Income
U/S 28(vi).
All the receipts in the hands of
employee will be treated as Profit
in lieu of Salary U/S 17(3).(Ref:Finance bill 2013)

The money will come back to

the employer under following
conditions:
Death Claim
Maturity Benefit
Policy Surrender
Partial
Full

During Assignment

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In case of Death claim

Before assignment

After Assignment

Company proposes the policy on the life of the employee

and promises to assign if the employee stays with the
company for 10 years. Company pays the premium and get
the benefit of 37(1) as revenue expenditure.

Company proposes the policy on the life of the employee

and promises to assign if the employee stays with the
company for 10 years. Company pays the premium and get
the benefit of 37(1) as revenue expenditure.

Employee dies in the 6th.year.

Company receives the Death claim .U/S 28(vi) it is treated

as Business Profits for that financial year. How ever
company makes an exgratia payment in the same financial
year to the widow or Legal heir of the decease employee.

Employer assigns the policy to the employee After

assignment employee dies

Employee legal heir/Spouse receives the Death claim .The

Death Claim to spouse or Legal heir of the decease
employee is tax free under section 10 10 D.

The widow of the deceased employee receives the money

100% tax free.(Circular 573).

Section 10 (10)(D)
Provided that the provisions of 92c[this sub-clause] shall not apply to any
sum received on the death of a person:
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In case of Surrender

Before assignment

After Assignment

Company proposes the policy on the life of the employee

and promises to assign if the employee stays with the
company for 10 years. Company pays the premium and get
the benefit of 37(1) as revenue expenditure.

Company proposes the policy on the life of the employee

and promises to assign if the employee stays with the
company for 10 years. Company pays the premium and get
the benefit of 37(1) as revenue expenditure.

Employee leaves the employment in the 6th.year.

Employer assigns the policy to the employee. After

assignment employee surrender the policy.

Company surrender the policy .The money received will be

treated as Business Profits U/S 28(vi) for that financial
year.

It will be treated as profit in lieu of Salary in the hands of

the employee.

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In case of Maturity

Before assignment

After Assignment

Company proposes the policy on the life of the employee

and promises to assign if the employee stays with the
company for 10 years. Company pays the premium and get
the benefit of 37(1) as revenue expenditure.

Company proposes the policy on the life of the employee

and promises to assign if the employee stays with the
company for 10 years. Company pays the premium and get
the benefit of 37(1) as revenue expenditure.

Employee leaves the employment just before the maturity.

Employer assigns the policy to the employee. After

assignment employee receives the policy Maturity.

Maturity money comes to the employer .The money

received will be treated as Business Profits U/S 28(vi) for
that financial year.

It will be treated as Profit in lieu of Salary in the hands of

employee.

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Tax Planning through Employer Employee

Money for legacy
Employer will take long term protection and saving plan
Policy will get assigned at the time of retirement
Death claim will go to the nominee or legal heir
Money for retirement
Employer will assign the policy to the employee at the time or
retirement
Employee will do partial withdrawals while considering the tax slab
Money for emergency
Employer will surrender the policy in case of emergency
If the expenses are high in year of surrender the income will get offset.

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Documents required for Employer employee

Documents required for Employer employee Applications.
1.
2.
3.

Board resolution , Authorisation letter, Rule of the Scheme

Business Insurance Questionnare
Profit loss account, Balance Sheet, ITR copy for last three years of the
company.
4. Memorandum of Association and Article of association
5. KYC form of the company (PAN card copy ,ID proof, photograph of the
directors and Address Proof)
6. DOB proof of the employee.
7. KYC of the employee (PAN card copy, ID proof, photo graph of the employee
and Address Proof)
8. Form16/ITR of the employee for last 3 years
9. Proposal form and cheque
10. Any other requirement on case to case basis.
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Product for Employer Employee:-

Traditional Plans
Unit linked Plans
Life Perfect Partner Super
Fast Track Super Wealth
7/10/15/20 Retirement Benefits
Accumulation and protection.
Whole life Super Long term
Savings and protection
Life Gain Premier 6/8/10/12
Wealth Accumulation and protection
Platinum Protect II Protection

Note: Payor rider can not be offered under Employer Employee

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THANK YOU
Thank You

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