Employer-Employee Insurance

. B) The minimum sum assured shall be determined in terms of the rules relating to financial underwriting for individual assurance taking into account the existing life assurance on the life of the individual.EMPLOYER-EMPLOYEE INSURANCE SCHEME A) The proposals will be treated as individual proposals from the employees concerned irrespective of whether the proponent is an employer or an employee.

. loan etc. the restrictions in respect of surrender. .C) If the employee is the proponent. of assigning the policy to the life assured. should be obtained with an undertaking that the letter will form the basis of the contract. A separate letter from the employer stating the object of insurance. the policy shall be assigned to the life assured at the earliest as per agreement between employee and employer.. timing etc. to be imposed and the conditions.

The seal of the person signing may be affixed on the proposal form.D) The proposal should be signed by a person authorised by resolution preferably by one of the directors of a public or private company. The restrictions imposed by the employer should be reasonable. Normally. . these should not go beyond five years from the date of policy in any case.

iv) In some instances. cover may be restricted to salary including premium payable by the employer and income derived from other sources. 300 may have to be used in such cases.E) i) Form No. employer may like to finanace loan towards payment of premium to the employee. The policy issued may be assigned to employer as a collateral security and re-assigned to the the policyholder on redemption of debt. 340 has to be used for the purpose. iii) We may satisfy ourselves that employer is a well known reputed commercial organisation. However. . proposal form no.

but not by proprietory firms. the said partner must NOT be having a substantial share in the capital of the firm. the scheme may be availed of by companies and well established partnership firms. . If the firm proposes for Insurance on the life of a partner.Usually.

1961.Tax Implications under Employer-Employee Scheme :The premium paid by the employer should be an expense for the employer and should be eligible for deduction under Section 37 of IT Act. The premium will form a perquisite in the hands of the employee under section 17(2) (v) and will be taxed as such under the existing tax structure. .

The premium will be eligible for rebate to the individual employee under Section 88 of IT Act.1961.. “Section 17-For the purpose of sections 15 and 16 and of this section. 1961. at the hands of the employee / his/ her nominee.. (2) “perquisite” includes . The maturity or death benefit will be exempt from income tax under Section 10 (10) (d) of Act.

section 6c of the Employees’ Provident Funds and Miscellaneous Provisions Act.(v) any sum payable by the employer.1952 (19 of 1952). as the case may be. or. whether directly or through a fund. to effect an assurance on the life of the assessee or to effect a contract for annuity”. 1948 (46 of 1948 ). . other than a recognised provident fund or an approved superannuation fund or a Deposit-linked Insurance Fund established under section 3G of the Coal Mines Provident Fund and Miscellaneous Provisions Act.

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