Section 37(1) of the Income Tax Act Employer-Employee Insurance

Employee welfare is one of the prime responsibilities of an employer. It helps in the smooth functioning of the organization and also develops a productive, healthy work environment. Employer-Employee Insurance, commonly known as group health insurance is one such benefit offered by the employer to his employee. Section 37(1) of the Income Tax Act employer-employee insurance mentions the tax exemptions on the premiums paid toward this insurance plan. In the article below, we shall look in detail at these plans, eligibility, and their benefits.

Read more
Tailored health plans, dedicated expertise - the perfect match for your organization's well-being
Customized plans

Affordable prices

24X7 Support

Dedicated claims manager

Total Care

All round wellness benefits

Fast-track your search with instant quotes from prominent insurers
₹1 Lakh cover starting at
No medical test required
Zero waiting period
Paperless claims
secure-icon We don't spam
Get Updates on WhatsApp

Whom do you want to insure?

  • Employee, spouse & kids

  • Employee only

Employer-Employee Cover Overview

Employee-employer insurance works on providing uniform health coverage to each member of the organisation. Such plans come complementary to the employee’s cost-to-company (CTC) since the company pays the premium on their behalf. In this manner, employees benefit from availing of such group medical or term insurance without bearing any cost on their salaries. Following are the types of plans covered under such agreement:

- Group medical insurance

- Group term life insurance

- Group personal accident insurance

Eligibility for Employer- Employee Insurance under the Income Tax Act

- Sole proprietors, partnership firms, MSMEs, or any private or public company, can buy employee-employer insurance.

- For group medical insurance there should be a minimum of seven employees.

- For life insurance, the minimum number of employees should be ten.

- For the employees to be covered under this policy, individuals must be of legally employable age, that is, above the age of 18 to 65 years.

- NRIs and foreign individuals working at a company in India are also eligible for this plan.

Overall benefits of Employer-Employee Insurance under the Income Tax Act

There are several benefits of an employer-employee insurance plan, they are:

- Increased productivity and morale of the workforce

- Employees gain access to quality healthcare

- Attract and retain talent

- Help lower attrition rate

Tax Benefits of Employer-Employee Insurance

Section 37(1) of the Income Tax Act mentions the tax exemptions for employer-employee insurance. Let us look at these tax benefits from the employer’s and employee’s points of view.

From the point of view of the employee:

- Employees can earn multiple benefits depending on group term life, personal accident, or group medical insurance plans.

- Employees and their families get a cover, free of cost.

- The premium for this insurance is paid by the employer; however, the employee is eligible to claim tax exemption u/s 80C.

- Complete maturity proceeding is tax exempted under section 10(10D) of the income tax act.

- Family members get financial protection in case of the unfortunate event of the death of the employee.

From the point of view of the employer:

- As per Section 37(1) of the Income Tax Act, 1961, an organization can apply tax exemption for the premiums paid towards employer-employee insurance

- This premium can be declared under business expenses, thus increasing the monetary benefits

- Such corporate-sponsored employee insurance can reduce the attrition rate

Points to Remember under Section 37(1) of the Income Tax Act - Employer Employee Insurance

The deductions or tax exemptions are allowed based on the following conditions:

- The expenditure shown should have been already covered under sections 30 to section 36 of the Act.

- The expenses must be incurred in the applicable accounting year.

- The expenses should be based on the business activity carried by the assessee. The profits of the business must be incurred after the business is set up.

- The expenses should not be personal expenses.

- Expenses are not of a capital nature.

- The expenses should be incurred exclusively for the business


Simply put, employer-employee insurance as per the Income Tax Act, consists of many insurance plans including group medical insurance. This is different from keyman insurance, wherein, the employer can only purchase term life cover. Comprehensive group insurance covers the employee’s and their dependent’s life, and health along with offering tax benefits and lower attrition rates to the employer.


Group Health Insurance Premium Calculator

Who do you want to insure?

  • Employees
  • Employees & their family

Minimum lives should be 7

  • 1 Lakh
  • 2 Lakh
  • 3 Lakh
  • 4 Lakh
  • 5 Lakh

Include maternity coverage

Premium starts from

(Excluding GST)

Let's find the right plan for you

Speak to our experts to get the right plan for your company's needs

icon Expert advice made easy icon
  • Date
  • Time

When do you want a call back?

  • Today
  • Tomorrow
  • 25 Jun
  • 26 Jun
  • 27 Jun
  • 28 Jun
  • 29 Jun

What will be the suitable time?

  • 11:00am - 12:00pm
  • 12:00pm - 01:00pm
  • 01:00pm - 02:00pm
  • 02:00pm - 03:00pm
  • 03:00pm - 04:00pm
  • 04:00pm - 05:00pm
  • 05:00pm - 06:00pm

Tell us the number you want us to call on

Your privacy matters. We won't spam you

Call scheduled successfully!

Our experts will reach out to you on 4th June between 2:00 PM - 3:00 PM

Written By: PolicyBazaar - Updated: 23 May 2023

Now help your friend get Business Insurance

Your referral is greatly appreciated!

Our team will reach out to your friend soon to help with their business insurance requirements.

Wait! Didn't find what you were looking for?

Our certified business insurance experts are just a call away.

icon Expert advice made easy icon
  • Date
  • Time

When do you want a call back?

  • Today
  • Tomorrow
  • 25 Jun
  • 26 Jun
  • 27 Jun
  • 28 Jun
  • 29 Jun

What will be the suitable time?

  • 11:00am - 12:00pm
  • 12:00pm - 01:00pm
  • 01:00pm - 02:00pm
  • 02:00pm - 03:00pm
  • 03:00pm - 04:00pm
  • 04:00pm - 05:00pm
  • 05:00pm - 06:00pm

Call scheduled successfully!

Our experts will reach out to you on 4th June between 2:00 PM - 3:00 PM

Call scheduled successfully

Thank you
Our experts will provide you assistance with your
insurance coverage. Be assured, all your questions
will be answered

Customizable plans from top insurers

starting @ ₹110/employee*

View Quotes
Group Health Insurance Articles
GIPSA stands for General Insurance Public Sector Association.It is a group of four General insurance companies...Read more
28 Apr 2022 by Policybazaar 16329 Views
A group medical insurance scheme offers many benefits in addition to providing financial support during medical...Read more
08 Feb 2023 by Policybazaar 8304 Views
When it comes to insurance, it's important to have a clear understanding of the available options. GPA (Group...Read more
01 Jun 2023 by Policybazaar 7935 Views
Extended work hours or working on holidays and weekends have become common in workplaces. Compensatory leave for...Read more
18 Apr 2024 by Policybazaar 669 Views
Companies worldwide strive to attract top talent by offering competitive salaries and outstanding corporate...Read more
15 Sep 2023 by Policybazaar 2229 Views
Investing in Group Health Insurance (GHI) is crucial for...Read more
07 Jun 2024 by Policybazaar 88 Views
Co-pay in group health insurance was Insurers introduced the...Read more
06 Jun 2024 by Policybazaar 84 Views
In today's workplace, companies must foster a culture of support...Read more
31 May 2024 by Policybazaar 126 Views
Extended work hours or working on holidays and weekends have...Read more
18 Apr 2024 by Policybazaar 669 Views
In today's competitive job market, where top talent holds the...Read more
29 Mar 2024 by Policybazaar 316 Views
Policybazaar for Business - Group Health Insurance - Customer Reviews
View all
Based on 189 reviews
out of 5
Based on 189 reviews
38 users
136 users
15 users
0 users
0 users
3.8 April 09, 2023
Excellent Support
It was easy to buy insurance from PolicyBazaar website and customer support was also amazing to clear all the doubts.Thankyou. Highly worth it.
4.3 April 01, 2023
Necessary Investment
It is a good and necessary investment. Thanks PB.
4.3 March 24, 2023
Provides Satisfactory Results
I purchased Group health insurance at policybazaar recently and i am so much satisfied with the plan. The application process was smooth and efficient, making the typically tedious task of getting insurance surprisingly hassle-free.Thanks PB.
3.8 March 16, 2023
Helpful In Making Decisions
When it came to selcting the right Group Health Insurance, Policybazaar offered an impressive range of options from reputable insurers. I appreciated the comprehensive details avalable for each policy which helped me to take the better decisions. Thankyou.
4.3 March 15, 2023
Increases Clients Expectations
I recently had the pleasure of securing a Group Health Insurance policy throug PolicyBazaar and I must say the Entire process exceeded my expectations! From start to finish, their service werw great. Thankyou.
3.8 March 02, 2023
Great Experience
I got great deals on PolicyBazaar website. Highly recommend.
4.3 February 17, 2023
Excellent Purchase
It was a excellent purchase at PolicyBazaaar. Thankyou team.
4.3 February 04, 2023
Prompt Services
Policybazaar's efficient claims process was impressive. In case of any medical emergencies, my employees were able to get their claims settled swiftly, allowing them to focus on their health and recovery without worrying about financial aspects.Thankyou
4.3 January 22, 2023
Budget Friendly Purchase
Thankyou PolicyBazaar for providing such a great plan at affordable premium rates. It was a budget-freindly purchase.
4.3 January 09, 2023
Multiple Range Of Benefits
I purchased Group health Insurance which offered me plans with affordable rates Thankyou PB.