Employee Benefits Insurance

4 Types of Employee Benefits Insurance that Employers Must Know About

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There is a host of benefits provided to employees of companies across sectors in India. These are employer-sponsored benefits that are provided to every employee by default. Employee benefits insurance is an important benefit available to the employees. Employers provide insurance benefits to the employees by way of group insurance.

There are many types of employee benefits insurance such as health insurance, life insurance, personal accident insurance, group employee deposit linked insurance, group travel insurance, and employee compensation insurance. An overview of each kind of employee benefits insurance has been provided here.

Types of Employee Benefits Insurance

Group Health Insurance

Employee health insurance scheme provides coverage for the expenses incurred by the employees on medical treatments in hospitals. It is the most prominent type of employee benefits insurance. The employer purchases group health insurance, and the premium is either borne completely by the employer or a certain percentage of the premium is paid by the employees. The family members and dependents of the employees are also usually covered by employee health insurance policies. 

Group Health Insurance - Employee Benefits Insurance

The major medical benefits for employees under group health insurance are as follows –

  • Critical illness cover 
  • Ambulance charges are covered 
  • No waiting period for any illness
  • Medical screening is not required 
  • Psychiatric treatment may be covered
  • Room rent coverage with or without limit 
  • Cashless treatment in-network hospitals 
  • Coverage for family members/dependants
  • Maternity coverage without a waiting period of 9 months. Newborn coverage till 90 days from the date of birth 
  • OPD benefits for doctor consultations, prescription medicines, diagnostic tests, annual health check-ups and more 
  • Hospitalisation expenses for treating illnesses or injuries, provided the hospitalisation period is at least 24 hours. Post hospitalisation expenses are also covered

The premiums of group health insurance policies are lesser as compared to individual or family health insurance. The reason is the distribution of risk among many people. Employee health insurance plans allow employees to choose add-on benefits over the base health insurance policy on more premium payment. 

Employers can claim tax deductions on premiums of group health insurance policies under Section 80D of the Income Tax Act. 

The best health insurance for employees provides comprehensive coverage with sufficient sum insured. 

Group Personal Accident Insurance

Personal Accident Insurance is another essential kind of employee benefits insurance. Group personal accident insurance works like individual personal accident insurance. The only difference is that in-group personal accident insurance, a master policy provides personal accident cover to each employee mentioned in it.

Group Personal Accident Insurance - Employee Benefits Insurance

The purpose of group personal accident insurance is to cover the medical expenses for treating accident-related injuries suffered by the employees and also provide compensation in case of accident-related partial/complete/temporary/permanent disability or death.

The specifics of the benefits provided to the employees through personal accident insurance are as follows –

  • Coverage of hospitalisation expenses posts an accident
  • Treatment of injuries caused by accident including burn injuries and bone fractures 
  • Ambulance charges for carrying the insured accident victim to the hospital are covered
  • Weekly compensation in case the insured person is rendered disabled due to an accident for a temporary period 
  • In case of partial disability caused by accident, the policy pays up to 60% of the sum insured
  • 100% of the sum insured is paid if the insured person is permanently disabled due to the accident 
  • The entire sum insured is paid to the nominee in case the insured person dies due to an accident
  • Educational benefits can be a part of the policy. This means the insurer pays the educational expenses of the insured employee’s children if they die in an accident or suffers a permanent disability 
  • Most plans cover the cost of transporting the mortal remains of the insured employee from the hospital to the residence or cremation ground

Employee Deposit Linked Insurance

Employee Deposit Linked Insurance is another type of employee benefits insurance. It is linked to the Employee Provident Fund Scheme. All the companies covered under Employee Provident Fund and Miscellaneous Provisions Act, 1952 are under the EDLI scheme.

The contribution towards EDLI has to be made by the employer only. The employer needs to contribute 0.5% of an employee’s basic pay and DA towards his/her EDLI scheme. There is no minimum service tenure to be enrolled under the EDLI scheme. However, an employee ceases to be a member of EDLI if they leave the EPF registered company.

Employee Deposit Linked Insurance - Employee Benefits Insurance

The benefit of EDLI is financial assistance to an employee’s family members in case of his/her death. The claim amount paid to the nominee is 35 times the average monthly salary drawn by the employee in the last 12 months before his/her death. The limit of the claim amount is Rs. 7 lakhs. A bonus of Rs. 1.75 lakhs is also provided under this scheme. 

The legal heir can claim the deceased employee if there is neither a nominee nor any family member. In the absence of a nominee, the surviving family members of the deceased employee are eligible for the claim amount. However, the employees’ oldest sons or married daughters are not eligible to make claims. If the nominee, surviving family member, or legal heir is a minor, the legal guardian can claim.

Employee Life Insurance

Employee Life Insurance is a life insurance coverage sponsored by the employer. A master contract purchased by the employer provides life insurance benefits to the employees. The policyholder is the employer, while the employees are the insured individuals.

Employee Life Insurance - Employee Benefits Insurance

There are multiple benefits of employment life insurance. Some have been mentioned here –

  • In the event of the death of the employee, the sum insured is paid to the nominee of the said employee.
  • Gratuity benefits are provided to the employees after completing a certain number of years in service. The employee life insurance fund is used to sponsor gratuity benefits.
  • The funds accumulated through the employee life insurance policy are used to provide retirement benefits to the employees.

Conclusion

Employee benefits insurance is one of the most effective ways of retaining employees and reducing the attrition rate. Employers are increasingly opting for such employee benefits. If you wish to provide employee benefits insurance now or in the future, then make sure that you check out Vital for they have a wide range of plans which you can choose as per your needs.

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