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What Our Plans Cover
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Life cover on the employee for the...
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Death benefit payable to the emplo...
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Maturity benefit
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Optional riders for critical illne...
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Assignment of the policy to the em...
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Continuity of cover after transfer...
Who Can Consider This Plan?
- A registered organisation with employees on its payroll
- A minimum group size, commonly seven to twenty depending on the cover
- Employees actively at work on the date cover commences
- Accurate census data — pricing follows the population profile
- Uniform benefit design within each defined grade
What May Not Be Covered?
- Suicide within the first twelve months
- Death from material facts concealed at proposal
- Any benefit to the employer, unless the structure specifically provides it
- Tax treatment other than that which the actual structure produces
- Continuation funded by the employer after the employee leaves
Always check the policy wording before you commit.
Why Choose Wealth & Covers?
- Expert advice to choose the right plan
- Plans from leading insurance companies
- Hassle-free process and documentation
- End-to-end support, including claim assistance
- Dedicated relationship manager
Our Insurance Partners
- Star Health Insurance
- Care Health Insurance
- Niva Bupa Health Insurance
- HDFC ERGO
- ICICI Lombard
- Bajaj Allianz
We represent multiple providers to help you find the most suitable option at the best price.
- Expert Guidance Personalised advice from experienced insurance professionals.
- End-to-End Support From choosing the right plan to claim assistance, we are with you always.
- Claims Assistance Hassle-free claim support to ensure you get what you deserve.
- Transparent Process Clear information, easy documentation and a hassle-free experience.
Overview
Employer-employee insurance is an arrangement in which the employer funds a life policy on an employee, with the employee or their family as the beneficiary. It is used as a retention and reward structure for senior or key staff.
Its usefulness depends entirely on getting the structure right. Who owns the policy, who pays the premium, who is the beneficiary, and whether ownership eventually transfers to the employee all determine the tax treatment for both parties — and the treatment differs materially depending on how those questions are answered.
It should not be confused with keyman insurance. Keyman protects the company against the loss of a key person, with the company as beneficiary. This protects the employee's family, with the employer as the funder. Different purpose, different structure, different tax position.
Who should consider it
Employers wanting to provide substantial life cover to senior or key employees as part of a retention package. Family businesses formalising benefits for key non-family staff.
Benefits
- Provides substantial personal life cover to a key employee
- A meaningful retention tool for senior staff
- Premium is generally deductible as a business expense
- Ownership can be transferred to the employee at a defined point
- Cover continues personally if structured for transfer
- Can be combined with a vesting schedule to aid retention
What is covered, and what is not
Read the right-hand column first. It is the one that decides whether a claim is paid.
Typically covered
- Life cover on the employee for the sum assured chosen
- Death benefit payable to the employee's nominee
- Maturity benefit, where a savings-type policy is used
- Optional riders for critical illness and accidental death
- Assignment of the policy to the employee, where the structure provides for it
- Continuity of cover after transfer of ownership
Typically not covered
- Suicide within the first twelve months
- Death from material facts concealed at proposal
- Any benefit to the employer, unless the structure specifically provides it
- Tax treatment other than that which the actual structure produces
- Continuation funded by the employer after the employee leaves
Inclusions and exclusions vary between providers and between plans from the same provider. The wording in your own policy document is what governs — we will walk you through it before you buy.
How it works with us
- 1 We profile the workforce, not just the headcount Age bands, salary bands, locations and dependants. A scheme priced on headcount alone is priced on the wrong data.
- 2 Benefit design before market approach Sum insured basis, family definition, waiting periods and co-payment. These decide the premium far more than the choice of insurer.
- 3 Quotes compared on claims service as well as price A cheap scheme with a slow TPA costs you in employee goodwill every single month.
- 4 Onboarding and employee communication We run the enrolment, produce the cards and explain the scheme to your people. Benefits nobody understands are benefits nobody values.
- 5 Mid-term additions and an annual review Joiners and leavers handled by endorsement, and a renewal built on your actual claims data rather than a standard loading.
Important considerations
The things a brochure tends to leave out. Read these before you decide.
- Document the structure before the policy is issued. Ownership, beneficiary and any transfer schedule determine the tax treatment for both parties, and retrofitting it afterwards is difficult.
- Take specific tax advice. The treatment of the premium in the employee's hands and the deductibility for the employer both follow from the structure rather than from the product.
- Agree what happens if the employee leaves. Without a written position, both parties end up in an unclear situation over a policy neither fully controls.
- Do not conflate this with keyman insurance. If the company is the intended beneficiary, this is the wrong structure entirely.
- Where transfer to the employee is intended, set the vesting point explicitly. That schedule is usually the retention mechanism the arrangement was created for.
Documents required
- Company registration and GST details
- Employee census — age, gender, salary band and location
- Details of dependants where family cover is included
- Existing policy schedule and claims data, where renewing
- Organisation chart, where cover varies by grade
- Signed proposal form from an authorised signatory
Frequently Asked Questions
How is this different from keyman insurance?
Keyman protects the company against losing a key person, with the company as beneficiary. This provides personal life cover to the employee, funded by the employer, with the employee's family as beneficiary. The purpose, the structure and the tax treatment all differ.
What is the tax position?
It depends entirely on how the arrangement is structured — who owns the policy, who pays the premium, whether ownership transfers, and when. Because the treatment follows the structure rather than the product, this is a case where specific advice before issuance is genuinely necessary.
What happens if the employee resigns?
Whatever the documented arrangement says. Common approaches are transferring the policy to the employee, surrendering it, or continuing it with the employee taking over premiums. Agreeing this at the outset avoids a dispute over a policy neither party fully controls.
Can ownership be transferred to the employee?
Yes, and it is frequently the point — a defined vesting schedule after a number of years makes this a retention instrument rather than merely a benefit. The transfer point has tax consequences and should be planned deliberately.
Is the premium deductible for the company?
Generally treatable as a business expense where the arrangement is properly documented as employee remuneration. The corresponding treatment in the employee's hands depends on the same documentation, which is why both sides should be advised together.
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