What is Employer Employee Scheme?
When an employee takes insurance on the life of its employees, it is known as Employer-Employee insurance. The employer himself may pay the premium or he may finance loan to employee towards payment of premium. There is no restriction on the minimum or maximum number of employees to be covered under employer –employee insurance. The employer can be any reputed company or partnership firm.
Employers have an insurable interest in his employees and vice versa. On this primary consideration alone, provided there is total absence of the moral hazard element in any given proposal, insurance cover on employee’s life can be granted. There will be many reasons for employers to have his employees live covered but the main reasons for granting insurance will be as follows: -
An enlightened employer may like to make provision as a welfare measure through life
insurance for the dependents of the employee in case of employee’s early and premature
demise and old age provision for the employee himself. This may constitute one of the
service benefits.
An employer may hold the life insurance policy as a sufficient inducement or
encouragement for the employee to continue with him since the employer has to spend
considerable amount of money and time to train a new employee and moreover upon exist
of such an existing employee, the employer may lose some of his trade secrets
An employer may desire to give certain additional benefits to his select band of employees,
as a reward of good services and who could not be otherwise compensated
