The Short Answer

Insurance as a Choice, Not a Mandate

Providing medical insurance, life insurance, or accident insurance is a decision that an organisation needs to take, whether to give it to the employees or not.

One of the rationales this would be based on is whether you want to use this as a benefit to attract or retain talent.

That’s a decision that you could take.

Shifting the Lens: Risk, Not Attraction

But today, we are going to not talk about that.

We are going to more talk about the risk factor.

So what is the risk factor?

Is Insurance Mandated by Law?

First, there is no law which mandates that you need to take these insurances for employees.

Yes, for accident insurance, the law and the guidelines sometimes do come into place based on what kind of role the person is performing or what kind of location the person is sent to.

But, otherwise, the other two insurances, nothing like that is there.

The Core Premise: Ownership of Risk

So the basic premise on which the insurance discussion starts is that, while performing official duties, if there is any mishap that happens, then the ownership of covering that financially lies with the organisation.

Risk Diversification and Risk Aversion

On that premise, we say that it is the risk diversification or risk aversion which warrants taking a life insurance or a medical insurance.

The Common Counter‑Argument

One could argue that a person who is operating in back office or a person who is sitting at the desk in an air-conditioned environment, why would you want to give them those benefits?

specially, as there are less chances of the person performing official duties and having a mishap.

What Are Official Duties?

So, what are official duties?

official duties are also considered traveling, if you’re traveling for an official duty, and if a mishap happens, then the financial liability is the organisations.

It could be an accidental mishap, but the point is, the person was performing that official duty.

It is not necessarily the person was doing a task which was officially required, which is carrying out some manufacturing, and a manufacturing accident happened.

It could also be the person is traveling by transport from point A to B to attend a client meeting, and a mishap happens.

Medical Conditions and the Modern Workplace

Similarly comes with a case of medical conditions.

Now in today’s world, medical conditions are not directly attributed to, inhaling certain fumes and as a result of that, having a medical condition.

There are so many other medical conditions which warrant a person to be aware that they can also be attributed to working in the environment, whether it’s got to do with mental well-being or whether that’s got to do with physical well-being.

The Organisational Decision

Therefore we recommend organisations that it’s a call you need to take, are you, as an organisation having the ability and the intent to support financially if the situation arises, or would you want an insurance to support?

The Practical Reality

But the key would be, in most of the cases, about six out of ten cases, for any medical condition or a mishap that happens as a result of on-duty employees, the financial responsibility will come on the organisation, and you will have to support that.

And in order to support that, either you should have your provisions, your funds, or you should pick up a life insurance or a medical insurance.

This article is based on the transcript of the original podcast of the same name featured in India HR Guide.
The transcript has been translated into this article with the support of AI and a human‑in‑the‑loop process.