If you are an employee or an employer, you might have heard about the employer-employee insurance scheme. But what is it, who qualifies and why is it important? In simple terms, this insurance plan is a smart way for companies to financially secure their employees’ well-being while also enjoying tax benefits.

This blog will walk you through the eligibility criteria, benefits and everything else you need to know about this scheme.

What is employer-employee insurance?

The employer-employee insurance scheme covers a range of protections to ensure employee well-being in unwanted situations. It also provides financial benefits to the employee’s family in the event of a death.

The scheme encompasses group health insurance, group term life insurance, group personal accident insurance and top-up insurance, among others.

  • It is usually part of employee welfare programmes
  • The employer pays a part of the entire premium
  • The benefit goes to the employee as well as their nominees

What is WC insurance and how is it different?

WC insurance, also known as Workmen Compensation insurance, is covers compensation to workers for accidents or injuries sustained during employment.

  • It is mandatory under the Workmen’s Compensation Act, 1923
  • Covers medical costs, lost wages and legal liabilities

While WC insurance is legally required for certain businesses, employer-employee insurance is optional and usually provided as a benefit to employees.

Who is eligible for employer-employee scheme?

Eligibility for the employer-employee insurance scheme is fairly broad but still has a few rules:

  • Must be a full-time salaried employee
  • Should be part of a company’s payroll
  • Both private and public sector employees qualify
  • Usually applicable to employees aged between 18 to 65 years

Eligibility for employers includes:

  • Should be a registered business entity
  • Must have a set number of employees to qualify for group insurance

Benefits for employees

Employees receive direct and indirect benefits under this scheme, such as:

  • Financial protection in case of accidents, hospitalisation or benefits to the family in case of death
  • Tax-free proceeds: Under Section 10(10D) of the Income Tax Act
  • Mental peace: Knowing you and your family are financially protected

In some cases, maturity benefits may also be provided if the policy includes investment components.

Benefits for employers

This scheme isn’t just good for employees. It comes with perks for employers, too:

  • Tax deduction: Premiums paid are considered business expenses under Section 37(1)
  • Attracts talent: Helps in employee retention and satisfaction
  • Boosts morale: Shows that the employer cares about employee welfare
  • Simple administration: Group policies are easier to manage

Why should you have this insurance?

Whether you are an employee or an employer, this scheme makes financial sense:

  • Provides social security
  • Acts as an added benefit beyond salary
  • Offers peace of mind for both parties

In industries where physical risk is involved, combining this with WC insurance offers a more comprehensive cover.

Things to keep in mind

Before signing up or offering this plan, here are a few things you should check:

  • Policy terms and conditions
  • Coverage amount
  • Beneficiary details
  • Tax implications
  • Employer’s responsibility post-policy

Conclusion

Employer-employee insurance is a win-win deal for both parties. Employees receive broader protection and have peace of mind, while employers can enjoy tax benefits and foster goodwill. If you are running a company, offering this benefit could go a long way in strengthening employee relationships. And if you are an employee, ask your employer about this policy—you might already be covered without knowing it.

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