Employer Employee Insurance Scheme from LIC of India

Employer Employee Insurance Scheme – how to get benefited 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 insurable interest in his /her employees. The interesting fact is that bot h the employee and the employer is b enefited through this arrangement.

Employer Employee insurance scheme – who is eligible?

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As per the definition, Family for the purpose of Employer Employee scheme is – Employee, his/her spouse and minor children only and Employee’s shareholding in the company should be less than 51% and Family share holding <71%.

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Any company, Partnership firm, or even proprietary concern shall be eligible for taking insurance for their employees under this scheme.

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Even a loss making comp any can get the benefit of this scheme.

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All plans and all modes are allowed for this scheme.

Employer Employee insurance scheme – benefits to the employees •

This scheme works as a reward programme for employees and helps in raising their morale.

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Even though the premium amount is paid by his employer, the employee can claim income tax exemption u/s 80C .

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Maturity proceeds will be available to the employee only.

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Entire maturity proceeding will be tax free u/s 10(10D) of income tax act.

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Death claim, if any, shall be paid to the nominee, nominated by the employee.

Employer Employee insurance scheme – benefits to employer •

Employee will feel to be more secured and honoured and naturally, the loyalty to the employer is enhanced.

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Employer is entitled to get exemptions for 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.

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Exemption u/s 37(1) can bring monetary benefits to the company.

Corporate Tax Rate for Domestic Companies in India 1.

A flat rate of 25% corporate tax is levied on the income earned by a domestic corporate.

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A surcharge of 5% is levied in case the turnover of a company is more than Rs.1 Crore for a specific financial year.

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3% educational cess is levied on the tax.

Employer Employee Insurance scheme â&#x20AC;&#x201C; Important points to remember 1.

Either the employer or Employee can be the proposer of the policy.

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If employer is the proposer, the policy should be assigned to the employee within a reasonable period of time.

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Maximum Sum Assured will depend on the financial underwriting rules and existing insurance on the life of the employee.

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Maturity amount will be tax free u/s 10(10D) of Income Tax Act.

Employer Employee Scheme Vs Key man Insurance It is natural to confuse employer-employee insurance with key man. Even though in both cases employer purchase a policy on employee, the two are very different. In key man insurance, one can only purchase term life cover. On the other hand employer-employee structures can be used for any kind of insurances.

In key man the insurance benefit on death is paid to the company and is subject to income tax.

However, in employer-employee scheme the benefit is paid to the employee and is tax free.

Employer Employee Scheme from LIC of India Form number 340 or 300 has to be used respectively for the employer or employee being the proposer of the scheme. If form number 340 is being used the policy will have to be assigned in favour the employee within a reasonable period.

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