EMPLOYER EMPLOYEE INSURANCE

What is Employer Employee Insurance Scheme?

• The employer-employee structure is one where the corporate buys insurance but the beneficiary is an employee.
• It's a benefit given by the corporate to pick out employees.
• In today’s context this is often particularly relevant because attracting and retaining employees is tougher.
• The employer-employee insurance works as a bequest program for the staff.

Employer - Employee protections conspire – who is qualified?

• Consolidated shareholding of the worker and their family members, for example, a life partner, youngsters, parents in law, guardians, kin, and so forth in the business organization ought not to surpass 51 %.
• There ought to be a connection among business and worker as the representative gains compensation for his administrations gave to the business
• Any organization, Partnership firm, or even exclusive concern will be qualified for taking protection for their representatives under this plan.
• Indeed, even a misfortune causing the organization to can get the advantage of this plan.
• All plans and all modes are taken into consideration this plan.

E-E Insurance plot – advantages to the business

• The representative will feel to be more verified and respected and normally, the unwavering ness to the business is upgraded.
• It assists with limiting worker whittling down rate.
• The business is qualified for getting exclusions for the top-notch sum (regardless of whether it is under single or non-single mode) u/s 37(1) of Income Tax go about as operational expense of the firm.
• Exclusion u/s 37(1) can carry fiscal advantages to the organization

Employer Employee conspire - Benefits to the workers

• This plan functions as a prize program for representatives and aides in raising their assurance.
• Even though the exceptional sum is paid by his boss, the representative can guarantee annual assessment exclusion u/s 80C.
• Development continues will be accessible to the representative as it were.
• Whole development continuing will be tax-exempt u/s 10(10D) of the annual expense act.
• Protection approach can be chosen so that it gives security to the representatives against sickness, mishap/inabilities, and early demise.
• Demise guarantee, assuming any, will be paid to the chosen one, designated by the worker.
• Two sorts of game plan conceivable.

Two sorts of E-E protection game plans are conceivable.

• Type A – The business/ boss is the proposer and worker is the Life Assured
• Type B – The Worker is the proposer and Life Assured
• In these two circumstances, the agreement will work in two distinct techniques. Let us have a point by point take a gander at it.
• Type A – Business/ Boss is the proposer and Employee the Life Assured
• Proposition structure for another life must be utilized.
• The arrangement will be allowed to the existence guaranteed (representative) according to an understanding between the Employer and Employee.
• The proposition ought to be marked by an individual approved by goals.
• A different letter referencing the 'object of protection' and the 'limitations' the business wants to force must be acquired
• Book of Accounts or IT orders throughout the previous 3 years of the organization to demonstrate productivity. (As the excellent risk lies with the organization).
• The Employer ought to embrace to dole out the approach to the Employee totally upon the Employee proceeding to stay in work with the Company for a period determined by the Employer. The usual time frame is around 3 to 5 years.
• The organization can force limitations on the worker to keep him from giving up or taking credit from the approach.
• The business can keep on paying premium much after the prefixed possession time frame and profit the tax cuts. If the Employee leaves the place of employment inside the predetermined period, the Employer can either give up the approach for its give up an incentive to the insurance agency or relegate the arrangement to the representative as a piece of the terminal advantages.


• Type B – the Worker is the proposer and Life Assured
• Proposition for claim life must be utilized.
• No need for the task of the strategy from the business.
• Representative is the proprietor of the arrangement with no limitations.

Employer Employee Vs Key man

• It is normal to befuddle E-E protection with the key man.
• Although in the two cases business buys an arrangement on a representative, the two are altogether different.
• In key man protection, one can just buy term life spread. Then again business worker structures can be utilized for any sort of protection.
• In key man, the protection advantage on death is paid to the organization and is dependent upon personal assessment.
• Be that as it may, in boss worker conspire the advantage is paid to the representative and is tax-exempt.

Does this plan provide tax benefits?

• Yes, it gives three sorts of tax benefits.
• Premiums paid are tax-free under section 80 C.
• Claim amount received by you or your nominee is tax free under section 10 (10D).
• Tax benefits under the policy are subject to conditions under Sec. 80C , 10(10D), 37 (1) and other provisions of the Income tax Act, 1961.

Income Tax Exemption on payment of Life Insurance Premium (Sec. 80C)

• Life Insurance premium paid in order to effect or to keep in force an insurance on the life of the assessee or on the life of the spouse or any child of assessee & in the case of HUF, premium paid on the life of any member thereof under an insurance policy, (other than a contract for a deferred annuity,) issued on or before the 31st day of March 2012 shall be eligible for deduction only to the extent of 20% of the actual capital sum assured or actual premium paid whichever is less.
• Life Insurance premium paid in order to effect or to keep in force an insurance on the life of the assessee or on the life of the spouse or any child of assessee & in the case of HUF, premium paid on the life of any member thereof, under an insurance policy, (other than a contract for a deferred annuity,) issued on or after the 1st day of April 2012 shall be eligible for deduction only to the extent of 10% of the actual capital sum assured or actual premium paid whichever is less.. Where the policy, issued on or after the 1st day of April, 2013, is for insurance on life of any person,
  who is—
• I. a person with disability or a person with severe disability as referred to in section 80U, or
• II. suffering from disease or ailment as specified in the rules made under section 80DDB, deduction under this section is allowed only to the extent of 15% of the actual capital sum assured or actual premium paid whichever is less.
• Contribution to deferred annuity plans in order to effect or to keep in force a contract for deferred annuity, on his own life or the life of his spouse or any child of such individual, provided such contract does not contain a provision to exercise an option by the insured to receive a cash payment in lieu of the payment of annuity is eligible for deduction.

Income Tax Deduction under section 80D

• Deduction allowable upto Rs.25,000/- if an amount is paid to keep in force an insurance on health of assessee or his family (i.e. Spouse & dependent children) or any contribution made to the central Government Health Scheme or such other scheme as may be notified by the Central Government in this behalf or on account of Preventive health check –up of the assessee or his family .
• Additional deduction upto Rs.25,000/- if an amount is paid to keep in force an insurance on health of parents or on account of Preventive health check –up of the parent of the assessee, whether dependent or not .
• In case of HUF, deduction allowable upto Rs.25,000/- if an amount is paid to keep in force an insurance on health of any member of that HUF.
• If the sum specified in (a) or (b) or (c) is paid to effect or keep in force an insurance on the health of any person specified therein who is a senior citizen, then the deduction available will be up to Rs.30,000/-. Here senior citizen means the person who is of sixty year or more during the previous year.
• In Case the amounts are paid in (a) or (b) or (c) on account of preventive health check up , the deduction for such amounts shall be allowed to the extent it does not exceed in aggregate Rs. 5,000 /-.
• For the purpose of deduction, the payment shall be made by
• Any mode, including cash, in respect of any sum paid on account of preventive health check up .
• Any mode other than cash in all other cases.
• The insurance as mentioned above shall be in accordance with the scheme framed by
• The General Insurance Corporation of India as approved by the Central Government in this behalf or;
• Any other insurer and approved by the Insurance Regulatory and Development Authority.

Income Tax Exemption on Maturity / Death Claims proceeds under Section 10 (10 D)

• As per Section 10(10D) of the Income Tax Act, 1961, any sum received under a Life Insurance Policy, including the sum allocated by way of bonus on such policy is exempt from tax where the sum is received as a death benefit.
• To get exemption under above section for sum received other than death benefit following conditions to be satisfied:
• I . Policy shall not be issued under Section 80DD(3), or
• II . Policy shall not be issued as a Key man Insurance Policy, or
• III . Policy which has been issued on or after April 1, 2003 and the premium paid in any of the years during the term of the policy not exceeding 20% of the Actual Capital Sum Assured.
• IV . Policy which has been issued on or after April 1, 2012 and the premium paid in any of the years during the term of the policy not exceeding 10% of the Actual Capital Sum Assured.
• Where the policy, issued on or after the 1st day of April, 2013, is for insurance on life of any person, who is—
• a person with disability or a person with severe disability as referred to in section 80U, or
• suffering from disease or ailment as specified in the rules made under section 80DDB, exemption under this section shall be available only if the premium payable in any of the years is not more than 15% of the actual Capital Sum assured.

Exemption Under Employer - Employee Insurance Scheme Section 37(1) of the Income Tax Act

• There is nothing that limits a Corporate from proposing disaster protection spread on the life of its representative; anyway the Income Tax Act doesn't give a particular area under which advantages could be profited by such a Corporate Proponent.
• The policyholders (Company) can guarantee advantage of sec 37 (1) of the I.T. Act, gave the corporate can demonstrate that the cost fulfils the arrangements of Sec 37(1) of the Income Tax Act, 1961.
• Amount payable by a business straight forwardly or by implication to impact a confirmation on the life of the worker is treated as a perquisite and assessable in the hands of the representative under Section 17 of the Income Tax Act.
• Employee can't guarantee under 80-C (as the premium is being paid by the business) and the advantages of the 10(10D).
• Premium sum payable by a business legitimately or by implication to impact an affirmation on the life of the representative is treated as a perquisite and assessable in the hands of the worker under Section 17 of the Income Tax Act. Any case sum will be tax exempt.

Step by step instructions to make a Claim – Life Insurance

• I . At the point when an individual with a disaster protection strategy – called a real existence guaranteed – passes on, a case insinuation ought to be sent to the insurance agent as ahead of schedule as could reasonably be expected.
• The chosen one or candidate under the arrangement can do this.
• So can any close family member or the operator who handles the strategy.
• The case suggestion ought to contain data like the date, spot and reason for death.
• The protection specialist has the obligation to help the existence guarantee’s family/trustee to manage the insurance agent to satisfy the conventions for a case.
• II . The insurance agent will react to this insinuation and will request the accompanying archives:
• Topped off case structure (gave by the insurance agent)
• Endorsement of death
• Arrangement report
• Deeds of assignments/re-assignments assuming any
• Legitimate proof of title, if the strategy isn't doled out or designated
• III. Type of release executed and saw
• Different archives, for example, restorative chaperon's testament, emergency clinic authentication, boss' endorsement, police examination report, after death report and so on could be called for, as relevant.

Maturity Claim Process of Life Insurance Policy

• Where an extra security strategy is developing, the insurance agent will normally send implication to the policyholder alongside a release voucher in any event a few months ahead of time of the date of development giving subtleties like the development sum payable.
• The policyholder needs to sign the release voucher – which resembles a receipt – have his mark saw and send it back to the insurance agent alongside the first approach attach to empower it to make the instalment.
• On the off chance that the approach has been allotted for some other individual or substance – like a lodging credit organization – the case sum will be paid distinctly to the trustee who will give the release.