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What types of personal insurance can the company use

What types of personal insurance can the company use

With the help of personal insurance programs, a legal entity solves three tasks:

  1. attract and retain employees. Corporate insurance, such as VHI or accident insurance, provides employees with additional social protection. This makes the employer attractive in the eyes of employees.
  2. Optimize taxation. Insurance of employees at the expense of the enterprise reduces the taxable base. An organization or an individual entrepreneur on the simplified tax system has the right to reduce the amount of tax by the number of insurance premiums paid, but not more than 50%.
  3. Provide financial protection for the company. Risk insurance, such as protecting workers from an industrial accident, shifts financial risk from the company to the insurer. For example, an employee is insured against an accident. If he is injured while working, he will be compensated by the insurance company, not by the employer.

The head and owner of the enterprise should pay attention to the following types of personal insurance.

1. Voluntary medical insurance (VHI)

A legal entity concludes a VHI agreement in favor of an employee who, if necessary, will receive medical assistance at the expense of the insurance company.

 Benefits for the insured:

  • increasing competitiveness in the labor market. The organization improves the quality of the benefits package for employees, thereby attracting and retaining staff;
  • tax optimization. According to Article 255 of the Tax Code of the Russian Federation,
    contributions under a medical insurance contract in favor of employees can be attributed to labor costs – this reduces the taxable base and optimizes the taxation of the enterprise.

What to look for when making an insurance contract:

  • reliability of the insurance company. This is true for any type of insurance;
  • the insurer’s infrastructure for servicing VHI (support service for insured persons, contracts with clinics);
  • cooperation of an insurance company with a polyclinic, which is located near the company’s office. This is very convenient for employees.

To assess the reliability of an insurance company, pay attention to the period of work in the market and shareholders. 

If the company has been operating for a long time, it can be trusted. 

If the shareholders are large financial and industrial groups, the state or foreign companies, the insurer can be trusted.

Insurers often offer special service conditions for top legal entities: when concluding a standard contract,

top managers receive an extended package of medical services.

Employee Accident Insurance

The company ensures employees against injuries and disabilities. Protection can operate around the clock or only during working hours. 

When an insured event occurs, the employee of the company receives payment. Its value is determined by the nature of the injury: the more serious the damage, the higher the payment.

The terms of the contract may provide for insurance payments for the risks “Death of the insured person” and “Disability”.

Benefits for the insured:

  • increasing competitiveness in the labor market;
  • tax optimization.

Like VHI, accident insurance increases the social security of workers. The cost of this type of insurance can be attributed to labor costs.

When concluding a contract, you need to pay attention to the conditions. 

The best option is that the policy is valid 24 hours a day, and the insurance coverage includes the risks of “Death” and “Disability”.

corporate endowment life insurance

A legal entity enters into an agreement in favor of employees and makes regular contributions to individual accounts. 

After the contract has ceased to be valid, the employee receives the amount accumulated in his account. 

In the event of the death of the insured person before the expiration of the contract, the full insurance payment is received by his heirs.

With the help of corporate savings insurance, you can retain employees: a savings account is an additional financial motivation.

 An employee will receive the money accumulated in his account if he works in the company for the period specified in the insurance policy, for example, 3 years or 5 years. 

If an employee quits prematurely, he will receive part of the sum insured or nothing receive. 

The rest of the funds will be received by the insured, that is, your company.

Benefits for the enterprise:

  • increasing competitiveness in the labor market;
  • tax optimization;
  • the ability to use insurance as an additional tool to motivate staff.

Corporate endowment insurances are tacitly called “golden handcuffs”. 

The policyholder has the right to appoint the insured person, ie the employee, as the beneficiary.

The insured may also appoint himself as the beneficiary. In this case, the employee will receive money if he fulfills the conditions specified in the supplementary agreement.

For example, to retain valuable personnel, the employer may pay an insurance amount depending on the length of service in the organization. 

Employees with experience of 5 years or more receive 100% of the sum insured, from 3 to 5 years – 80%, from 2 to 3 years – 50%. If an employee has worked for less than 2 years and quits, he loses the right to accumulative insurance.

The main insured event under corporate endowment life insurance contracts is indicated by the insured and the insurer to survive until the end of the contract. That is, on the day the contract expires, the beneficiary receives the agreed sum insured.

For the risk of “Death of the insured person”, the insurer, depending on the terms of the contract, pays the full sum insured or returns the contributions made to the policyholder or beneficiary.

When choosing an insurer, prefer well-known companies with a long history of work in the market (more than 10 years). Pay attention to the investment yield on the company’s contracts over the past few years. 

Profitability information can be found on the company’s website. It should not be too high or low, as this indicates a risky or inefficient investment policy, respectively.

The standard can be considered the yield on an annual deposit in large banks minus 1.5 – 2 percentage points. 

That is, if the return on an annual deposit in large retail banks for the year is 9%, the normal return on a long-term insurance policy is 7%.

Personal corporate insurance increases the competitiveness of the company in the labor market and optimizes taxation. 

VHI agreement and endowment insurance can be used as an additional tool to motivate employees

Eleena Wills
Eleena Wills
Hi, I’m Eleena Wills. Being a writer and blogger, I strive to provide informative and valuable articles to people. With quality, constructive, and well-researched articles, one can make informed choices. I cover a wide range of topics, from home improvement to hair styling and automotive.


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