Employee Retention

• The company on the lives of Employees purchases Life Insurance, which will provide money to their family members in event of their premature death and also makes provision for their old age. These additional benefits will act as sufficient inducement to continue with the present Employer

• We take this opportunity to introduce ourselves – Corporate Bima. We secure Corporates Businesses & Key Personnel against potential liabilities & losses. There is no restriction for companies/ firm proposing on the lives of the Employees. However Employer has to assign the policy in favor of Employee within reasonable time

• Premiums paid by company will qualify as eligible business expenses under Sec.37 (1) of the Income Tax Act.
• Employee is entitled to claim tax rebate u/s 80C for the premiums paid by the employer.
• Maturity proceeds are tax free u/s 10(10D) in the hands of employee. (Terms & Condition Apply)

• Employee will consider the premiums paid by Employer as one of the additional service benefits.
• It will act as sufficient Inducement for the employees to continue with the same employer, which saves lot of money required to recruit and train the new employee.
• It will act as welfare measure for the Employee, as it provides Income to their Families in event of their premature death and also take care of their old age.

• For the benefit of Employees for better relationships.
• To fulfill the employment contract between Employer and Employee
• For the benefits under labour laws to create funds.
• To provide for Gratuity

• An enlightened employer may like to make provision for the dependents of the employee in case of employee’s untimely and premature demise and also for old age provision for employee himself, as a welfare measure through Life Insurance policy. This may be considered as one of the service benefits.
• An employer may hold the life insurance as sufficient inducement or encouragement for the employee to continue with him, since the employer has to spend considerable amount of time and money to train a new employee and moreover on the exit of such employee, employer may loose some of the company’s trade secrets.

• An employer may desire to give certain additional benefit to his select category of employees as a reward of good services, those could not other wise, be compensated.
• An employer may also like to insure his select category of employees as they may be traveling frequently.

• Employees are entitled to certain benefits like provident fund (PF) and family pension (FP). There are two types of companies
  • Companies which are compulsorily liable to pay these benefits
  • Companies desire to pay above benefits voluntarily
• In both cases company can create funds through purchase of Life insurance policies. Employers under first category have to take permission of PF authorities to purchase life Insurance policy in lieu of PF contribution.

• Those employers who want to pay above benefits voluntarily can purchase the Life Insurance policy, the rules applicable will be as under :
  • The company can decide to pay the benefit to select employees only and take life insurance policy to create fund for such employees only.
  • The company doesn’t require permission of PF authority
  • The premiums paid are allowable expenses under heading REMUNERATION AND BENEFIT to EMPLOYEE under section 32 of Income Tax Act. The expenses under this scheme are genuine expenses and don’t come under discretionary power of Income Tax Officer.

• Gratuity is a statutory benefit payable under gratuity act. Today government plans for welfare of senior citizens. Gratuity by private and small company is also step in direction of welfare of senior citizens.
• The company requires big amount to pay gratuity at the time of retirement of the employee. This amount has to be created during the service period of employee by providing reasonable amount every year. The amount provided every year for Gratuity can be invested in LIC Policy through EMPLOYER EMPLOYEE INSURANCE SCHEME. The premiums paid every year are allowable expenses under the heading “Remuneration and Benefit of employee”.

• If the Gratuity payable to a particular employee is less than the maturity value of the policy proceeds, then the company can add the required amount from their Profit & Loss account.
• Please note that Employer must take maturity before the payment of Gratuity of respective employee. This is the provision of the labour laws and income tax, which indirectly applies for gratuity purpose.
• To pay gratuity through any Endowment insurance policy is the best-suited policy as the employer can decide maturity as per the retirement or the premature retirement of an employee.