Life Insurance Corporation of India’s (LIC) Employer-Employee Insurance Scheme is among the most popular life insurance schemes in India, proven as an effective aid for companies in providing financial assistance to employees in case of health crises.
LIC’s Employer-Employee insurance scheme is growing rapidly because of aspects such as tax benefits, comprehensive coverage choices, concern for the welfare of employees, and regulatory efforts. This growth reflects the manner in which progressive organizations are safeguarding the health and financial security of employees and also assisting companies in retaining talent and overall organizational success.
WHAT IS LIC EMPLOYER EMPLOYEE INSURANCE SCHEME?
LIC Employer-Employee Insurance Scheme is a life cover bought by employers for their employees. This coverage offers financial stability in the event of medical emergency, making it an invaluable employee perk. It supports business growth by luring in new talent in addition to keeping hold of existing staff. If stated in the terms and circumstances, employers may elect to pay employees for policy premiums, and the policy also covers the employees’ families.
LIC EMPLOYER-EMPLOYEE SCHEME TYPES
- Individual Life Insurance: Each employee’s coverage is purchased by the employer.
- Group Life Insurance: A single insurance that covers several employees is purchased by the employer.
- Employee Health Insurance: Employees are covered by their employer’s health insurance.
WHO IS ELIGIBLE FOR THE EMPLOYER-EMPLOYEE INSURANCE PROGRAM?
- Employees and their family members, including spouses, kids, in-laws, parents, siblings, and others, should not own more than 51% of the employer’s stock.
- Since the employee receives compensation for the services he provides to the employer, a relationship between the two parties should exist.
- Under this plan, any business, partnership firm, or even proprietary enterprise may purchase insurance for its staff.
- Even businesses that are experiencing losses and financial challenges are qualified.
BENEFITS FOR EMPLOYERS
- The amount of the employer premium will be deductible as an expense under Section 17(v) of the I.T. Act of 1961.
- Employer saves 25.17% on premiums by lowering the amount of profit-related taxes due (since gross profit is reduced).
- Although the employer has a 75% cash outflow, they pay the full premium in the employee’s name.
- Because the employer owns the entire policy for the “Specified Period,” they have complete control over the conditions.
- As long as the core group of employees stays with the company, as agreed upon, the employer can achieve immediate, medium, and long-term planned growth (3 years/5 years).
- Concerned employees’ commitment and loyalty would increase, according to the employer, as they observe their benefits growing year in terms of premium accumulations.
- A significant risk of losing knowledgeable and competent workers to competitors is avoided.
BENEFITS FOR EMPLOYEES
- An employee receives recognition as a key contributor to the company’s future.
- For remaining in the company during the “Specified Period,” the employee receives additional financial benefits from the employer in the form of premium payments.
- The employer pays the employee 100% of the premium for the duration of the “Specified Period”.
- The employee is reassured that if he remains with the company, the employer cannot withdraw, surrender, assign, or transfer the policy during the “Specified Period”.
- According to Section 10(10D) of the Income Tax Act, the entire maturity process will be tax-free.
- After the “Specified Period,” the employee acquires ownership of the policy on an absolute assignment and is entitled to all benefits as an individual policyholder.
- Can submit his personal returns to obtain his income tax refund u/s 80C.
Get in touch with us if you would like additional information about the Employer-Employee Insurance Program.