Employer- Employee Insurance
What is Employer - Employee Insurance (EEI) ?
In today’s world of professional management success of a company solely depends on the Individual Talents of employees, whose Skill, Integrity and other capabilities are essential for the future progress and prosperity of the company.
Exit of an employee due to resignation will result in immediate financial loss to company, as the Employer has to spend considerable amount of time and money to recruit and train the new employee and moreover upon exit of an employee, the employer may loose some of the trade secrets. Than question arises, how does a company retain the Employees?
Employers have an insurable interest in the lives of their employees. In view of this we can allow life insurance cover for employees where the premiums are paid by the employer.
An employer employee relationship would be established where the employee earns a regular salary from the employer. The insurance policies can be taken for all employees or for a class of employees. The employer may or may not be the Proposer under the policy.
All plans allowed to employees under individual insurance are allowed. (Cir: Actl./2062/4 dated 11th March 2006)
Benefits to Employer
Premium amount will be allowed as expenditure under I. Tax Sec. 17 / 2(v) of I.T. Act, 1961.
Employer has a saving of 25.17% of premium payable by way of reduction of tax payable on profits (as Gross Profit is reduced).
Employer pays the 100% premium on Employee’s name but has a Cash Outflow of only 75 %.
Employer has entire ownership of the policy during the ‘‘Specified Period’’ & hence has full control of situation.
Employer can achieve immediate, medium & long-term Planned Growth (3yr/5yr) of the company as the Core Group of Employees stay in the company increases as per mutual agreement.
Employer would see improvement in loyalty & involvement of concerned employees, as they see their benefit being accrued & increasing every year in terms of the premium accumulations.
A major threat of losing well informed/capable employees to competition is averted.
Benefits to Employee
Employee gets recognised as important contributor for company’s future.
Employee gets additional monetary benefit (in the form of premium payment done) from Employer for staying in co. in the ‘’Specified Period’’.
Employee gets 100% premium payment from Employer for entire term during ‘‘Specified Period’’.
Employee has the comfort that Employer cannot withdraw /surrender /assign /transfer the policy during the “‘Specified Period’’ if he stays on in the company.
Employee has benefit of deferred tax payment on assignment of policy after ‘Specific Period’
Longer deferment → Higher benefit.
Employee becomes the Owner of policy on absolute assignment after the ‘’’Specified Period’’and gets all benefits as an Individual policyholder.
Can claim INCOME Tax rebate in his Personal Returns.
Video Presentation on LIC Employer - Employee Insurance Scheme in Tamil.
1:03 -- Business Insurance Solutions - An Introduction
5:24 -- EEI vs KMI
7:53 -- Employer - Employee Insurance - Introduction to EEI
10:04 -- Insurable Interest
10:40 -- What is EEI ?
11:43 -- Objectives of EEI
13:03 -- EEI - Benefits to Employee; முதலாளிக்கான பலன்கள்
16:05 -- ஊழியருக்கான பலன்கள்
18:04 -- Employer-Employee Insurance-Interpretation of Tax Implications?
19:57 -- Who can be given EEI Scheme?
21:14 -- Condition on Beneficial Ownership
22:30 -- Types of Organization
23:24 -- Different Options available to the Employer
27:53 -- FEATURES OF Different EEI Scheme Options
30:04 -- Specified Period vs Post-Assignment Period
33:31 -- EEI Model Presentation
37:22 -- DOCUMENTS REQUIRED FOR EEI
38:02 -- Employer Employee Insurance Annexures
39:00 -- EEI Conditional Assignment Format
40:22 -- IRR on EEI scheme
41:50 -- Contact for LIC EEI scheme in Coimbatore.