'Compensation refers to all forms of pay or rewards going to employees where some payments are direct and some are indirect'.

An indirect payment is:

Employer paid Insurance

The correct answer is option 4- Employer paid Insurance.

Employer paid Insurance is an indirect payment.

All organisations need to establish wage and salary plans for their employees. There are various ways to prepare different pay plans depending on the worth of the job. Basically the price of the job needs to be determined. Compensation, therefore, refers to all forms of pay or rewards going to employees. It may be in the form of direct financial payments like wages, salaries, incentives, commissions and bonuses and indirect payments like employer paid insurance and vacations.