FAQS ON EMPLOYER EMPLOYEE INSURANCE
What is Employer-Employee Insurance?
Life Insurance policy taken by an employer on the life of his employees for
the benefit of employees is called an Employer-Employee Insurance
(EMPLOYER-EMPLOYEE INSURANCE). An employer can choose to take
multiple policies for more than one employee.
There are two (2) options available under Employer-Employee Insurance
Option-1
  • Employee is the proposer himself and retains control over the policy as
    the owner of the policy.
  • Employer is the premium aggregator.
  • The standard application form is completed by the employees
  • This application form must be accompanied by a letter from the
    employer committing to pay the premium.
Option-2
  • Employer is the proposer and retains the right to assign the benefits of
    the policy to the employee. The time and manner of assignment is
    defined in the scheme.
  • The employer proposes the policy for the employee and pays the
    premium
  • The standard application form is signed by the Authorized signatory on
    behalf of the employer as a part of terms and conditions of his
    employment. Later the Authorized Signatory could assign the policy in
    favor of the employee (on behalf of the employer).
  • The application form must be accompanied by a letter from the
    employer stating the object of insurance restrictions imposed regarding
    loans, surrender etc. and that the policy would be assigned in favor of
    the employee.
What is the minimum number of employees for an organization to opt
for an Employer—Employee Insurance? (E.g. can an organization with
just three employees take an Employer— Employee Insurance?)
There is no restriction as to the minimum numbers of employees for an
organization to opt for an Employer—Employee Insurance. An organization
with any number of employees can opt for Employer— Employee
Insurance.
What are the products that can be offered when the employer is the
proposer?
In a case where the employer is the proposer all individual products can
be offered under an Employer — Employee Insurance, subject to internal
guidelines of Life Insurance Companies.
Are there any restrictions on percentage holding in the business to
qualify as employee for Employer — Employee Insurance?
Yes. There are restrictions on percentage share holding in the business by
the employee. Threshold limit of shareholding (beyond which the life
insurance will not be considered under Employer -Employee cover) is:
  • Individual holding < 50% and
  • Employee + Family holding put together <=70%
What proof of insurance is given to the employee/his family under
Option2? (i.e. do they get a copy of the policy docket?)
No proof is given to the employee under Option 2. Under this option, the
employer is the owner of the policy and all the correspondence would be
with the employer.
Under Option 1, are the premium notices and receipts sent both to
the employer and employee?
The premium receipt is sent only to the employee in Option 1.
Who will pay the premium in case of conditional assignment of such
policies under option 2?
In case of conditional assignment of such policies the employer continues
to pay the premium.
Can a Partnership firm take an insurance policy for its partners under
an Employer – Employee Insurance?
Partnership firm cannot take an insurance policy for its partners under an
Employer-Employee Insurance. The reason for the same is that the
partners are not regarded as employees of a partnership firm.
For any policy to be bought under employer employee proof of
employability is mandatory requirement.