GROUP TERM PLAN
GTLI Policy is a fundamental constituent in benefit packages presented to employees by employers and is an integral part of Employer Benefit schemes.
Group Term Life Insurance Plans, (GTLI) as the name suggests, are designed to offer life insurance to a group of people under a single policy. GTLI policy is not restricted to merely employer-employee groups but is also extended to other groups such as customers of banks, NGOs, professional groups, non-banking financial institutions, and microfinance institutions. A GTLI policy for employees assures financial assistance and independence to the beneficiaries of the concerned employee, in the event of his or her death.
It offers multifarious benefits, from uniform covers to all, to ranked covers to various grades of members. Some group insurance schemes also provide coverage for outstanding loans to a group of borrowers, while some come with critical illness and disability benefits
FEATURES
Group term life insurance schemes have a lot of attractive features that make them ideal for employee benefit packages. Following are few of the many features of group life insurance schemes:
-
Members can be added at any point of the year
-
A pre-decided sum assured is paid to the beneficiary of the insured in the event of death
-
Add-on covers are provided as riders that insure for critical illnesses, accidental deaths, disabilities, etc.
-
The application process is quick and easy
-
The minimum size of the group is 50 members
-
Terminal illness is provided as a built-in benefit
-
Cheaper than individual policy cover
-
Employees can enjoy the benefits they are entitled to while maintaining a healthy and strong connection with the employers
Renewal Process: Group life insurance plans can be renewed after a year of the commencement of the policy. The corporation gets 3 months to revive the policy from the date of the first unpaid premium. If the policyholder wants to add or remove any member from the policy, he/she can do it at the time of renewal.
Exclusions: The group life insurance policy will be excluded if the policyholder dies due to suicide. In this case, the insurance company will only be liable to pay 80% of the single premium paid.
Benefits of a Group Term Insurance Plan to employees:
-
Employees are assured of financial assistance being extended to their families in the unfortunate event of their demise, critical illness, etc.
-
Employees can benefit from the inconvenience of medical tests be done away with until their free cover limits
-
The premiums paid by their employers are not treated as perquisites
-
Employees can enjoy death benefits that are exempt from tax under Section 10(10D)
-
Easy administration by way of simple documentation
-
Can be customised to meet niche needs of the employees enrolled
-
Offers security to the family of the insured
-
Safeguards the insured’s financial interest
Group term life insurance policies are offered to the following sections of people:
-
Employer-employee groups
-
Non employer- employee groups
-
Banks
-
Professional groups
-
Non-banking financial institutions
-
Microfinance institutions
CLAIMS
Group Life Claim Process: Group Life Claim Process: In case of the untimely demise of the employee, the nominee or beneficiary can file a claim to get the sum assured through the following steps: Inform the insurance company within 24 hours or as early as possible Submit the necessary documents like original death certificate, insurance copy, medical documents supporting the reason of death, etc. to the insurance company Once these documents are submitted, the insurance company would assess the details and accordingly settle the claim, if approved.
Time Taken to Settle Claims: On receiving the required documents for making claims, the Insured will connect with insurance Company that will evaluate the documents. Once they are satisfied with the claim, they will transfer the amount to the beneficiary through the organisation within 7-10 days from the date of receipt of the documents.
Renewal Process: Group life insurance plans can be renewed after a year of the commencement of the policy. The corporation gets 3 months to revive the policy from the date of the first unpaid premium. If the policyholder wants to add or remove any member from the policy, the company can do it at the time of renewal.
FAQ's
-
The maximum age to enroll in a group life insurance plan is 69 years.
-
The maximum age at the time of expiry of the policy is 70 years.
The minimum age for enrolling into a group term life insurance plan is 18 years of age.
The tenure of a group term life insurance policy is 1 year.
The following are the benefits of a group term insurance plan for employees:
-
Employees are assured of financial assistance being extended to their families in the unfortunate event of their demise, critical illness, etc.
-
Employees can benefit from the inconvenience of medical tests being done away with until their free cover limits.
-
The premiums paid by their employers are not treated as perquisites.
-
Employees can enjoy death benefits that are exempt from tax under Section 10(10D)
-
Easy administration by way of simple documentation can be customized to meet the niche needs of the employees enrolled
-
Offers security to the family of the insured Safeguards the insured’s financial interest
GROUP GRATUITY PLAN
It is a known fact that Gratuity Liability tends to increase with time as the salary and the tenure of the employee increase. An employer can pay out the gratuity proceeds from his current revenue (on a PAYGO basis) but this can cause financial strain at times. Thus, a prudent and tax-efficient way of meeting Gratuity Liability is to ascertain the Liability, set up a Gratuity Fund, and pay contributions as and when required.
The Insurance Companies offer two kinds of plans- Guaranteed return Plans and Market Linked plans. A company contributes towards its liability which is invested by the Insurance Company to generate returns on the corpus. This plan offers interest income or market-linked returns which get credited to the policy at the end of the financial year. The interest amount once credited to the policy account will become guaranteed. However, with the market-linked plan, the returns are depicted through the growth of NAV, and the value of the corpus at the end of the financial year is considered for the purpose of valuation. Hence, you build a Gratuity Fund systematically, benefiting from investment returns that are safe and stable and thus provide the benefits in a cost-effective manner. The liability of the Life Insurance Company at any time will be limited to the balance in the policy account.
FEATURES
A few of the key features of the Group Gratuity scheme offered by the Life Insurance Companies are mentioned as follows:
Members can be added at any point of the year.
-
Guaranteed interest rate/ Market Linked Plan - Insurance Companies offer two kinds of Plans- Fixed Interest Rate and Market Linked plans. The Market Linked Plans have a variety of schemes- Debt Funds, Equity Funds, and Balance Funds.
-
Built-in Insurance arrangement for the employees for future service - On death of the life insured during the term of the policy while in service before the retirement age, the sum assured, along with the gratuity benefit, under the basic plan is payable, provided the policy is active.
-
Fund management under the Fund Managers - Guaranteed Return/Market Linked Plans are being managed by the team of Fund Managers who invest the funds based on the option opted by the Insurer.
-
Claim settlement on exit as per company rules/gratuity act - The formula is defined by the act and the settlement is done in accordance with the same. In some cases, settlement can be according to the rules laid down by the company.
-
MIS related to Income Tax and trusts accounts and Actuarial valuation - Every Company has to get the valuation of the Liability as a statutory requirement since it is part of the Balance Sheet.
The insurance premium paid towards the Group Gratuity scheme is treated as deductible business expenses to the company.
ENTITIES TO WHICH THE GRATUITY RULE APPLIES
Generally, every factory and establishment pays gratuity to its employees for the services rendered to it. However, the gratuity rules do not mandatorily apply to such entities that have less than 10 persons and the number of employees for this purpose is counted as an average of the last 12 months.
WHEN IS AN EMPLOYEE ENTITLED TO CLAIM GRATUITY
-
On leaving the job: One of the occasions, when an employee is entitled to claim gratuity, is on the termination of his employment. There can be many reasons for this such as retirement/voluntary retirement, resignation, sometimes the employer may terminate the employee (not for some bad conduct of the employee as in this case the employee may lose his chance of claiming gratuity) or sometimes the employee may find some better opportunity so he might opt for a job-switch.
-
Death or permanent disablement: The other circumstance where an employee can claim gratuity is in case of his/her death or disablement which renders him permanently incapable of working in that company forever. However in such cases, the Income Tax has relaxed the five years criteria, therefore an employee can claim his/her gratuity even if he/she has worked for less than five years. In case of death, the nominees of the employee are given the gratuity. In case of the nominee is a minor, the amount of gratuity shall be deposited with the controlling authority. Controlling authority deposit/invest the gratuity amount in a financial institution or bank for benefit of the minor, as may be prescribed, until the such minor attains majority.
CALCULATION OF GRATUITY:
The calculation of gratuity depends upon two variables:
-
Salary
-
Superannuation
In calculating the gratuity fifteen days' salary is given for every completed year and as the number of working days in a month is considered to be 26 only (excluding the Sundays) therefore the formula for calculating the gratuity would be:
Formula: Last drawn salary x 15/26 x Completed years of Service (including a part of a year in excess of six months) In case of an employee working in a seasonal establishment he shall be paid gratuity at the rate of 7 days' wages for each season.
MAJOR EXCLUSIONS
-
Any treatment within the first 30 days of cover except for any accidental injury.
-
Any Pre-existing diseases/conditions diseases like cataracts, hernia, hysterectomies, joint replacement, etc. will be covered as per the specified period of the policy.
-
Expenses arising from HIV or AIDS and related diseases.
-
Abuse of intoxicant or hallucinogenic substances like drugs and alcohol Hospitalisation due to war or an act of war or due to nuclear, chemical, or biological weapons and radiation of any kind.
-
Non-allopathic treatment, congenital external diseases, mental disorders, cosmetic surgery, or weight control treatments.
FORFEITURE OF GRATUITY
-
Any treatment within the first 30 days of cover except for any accidental injury.
-
Any Pre-existing diseases/conditions diseases like cataracts, hernias, hysterectomy, joint replacements, etc. will be covered as per the specified period of the policy.
-
Expenses arising from HIV or AIDS and related diseases.
-
Abuse of intoxicant or hallucinogenic substances like drugs and alcohol.
-
Hospitalisation due to war or an act of war or due to nuclear, chemical, or biological weapons and radiation of any kind.
-
Non-allopathic treatment, congenital external diseases, mental disorders, cosmetic surgery, or weight control treatments.
TAX TREATMENT OF GRATUITY
Gratuity is not entitled to any exemption from tax. When an employee receives a gratuity it would be taxable under the head ‘Income from salary. And when the employee is entitled to gratuity on account of his death it would fall in the hands of his/her nominee and would be charged under the head ‘Income from other sources. For the purpose of calculation of exempt gratuity, employees may be divided into categories:
Government employees: They are fully exempt from receipt of gratuity.
Non-government employees: covered under the Payment of Gratuity Act, 1972: Maximum exemption from tax is least of the 3 below:
-
Actual gratuity received;
-
Rs 10,00,000;
-
15 days’ salary for each completed year of service or part thereof;
GRATUITY IN CASE OF DISABLED EMPLOYEE
If a worker or employee becomes disabled due to a disease or an accident and as a result is not able to perform the task which he/she was performing prior to such disability, however, is re-employed on some other task/job on reduced wages, he/she shall be paid gratuity as follows:
-
For the period preceding the disablement: On the basis of the last drawn wages by the employee at the time of disablement.
-
For the period subsequent to disablement: On the basis of last drawn reduced wages by the employee at the time of termination of employment.
ELIGIBILITY
-
Maximum Age: The maximum entry age is 65 years.
-
Minimum Age: The minimum entry is 21 years.
Tax Benefits
As per the applicable tax laws. Tax benefit is subject to change in tax laws from time to time. [For Employer] The initial and Annual contributions made through an approved Gratuity trust can be claimed as business expenditure as per the provisions under section 36 (1) (v) of the Income Tax Act, 1961 subject to maximum limit of 8.33% of annual salary in respect of each member. Income of investments is exempt from tax under section 10(25)(iv) of the Act. [For Employee] Gratuity benefits are tax free up to Rs. 20,00,000 in the hands of employee. The contribution made by the employer is not included in the value of taxable perquisites in the hands of the employee. Any death benefit under the Group Term Insurance is tax-exempt under section 10 (10D) of the Income Tax Act, 1961. These tax benefits are as per our understanding of the Income tax Act 1961 and is subject to change. For further details please consult your tax advisor Government employees: They are fully exempt from receipt of gratuity.
CLAIMS
(A) A person eligible for gratuity shall give in writing to the employer (B) The employer shall determine the amount of gratuity and give a notice in writing to employee to receive the gratuity when due. (C) The employer shall the make the Gratuity payment within 30 days to due. (D) Amount is not paid during the specified time by the employer, he shall pay a simple interest for the delayed time at rate as the government, (E) any dispute regarding amount of gratuity or the person receiving Gratuity shall be paid the Controlling Authority. (F) any aggrieved party can make an appeal to the appropriate government within 60 days from receipt of orders.
FAQ's
GROUP SUPERANNUATION PLAN
As an employer, your employees are your most important asset. It is important for you to show your appreciation and gain their loyalty by offering them special benefits. These benefits can improve their lives and help them save for their retirement. With a Group Superannuation plan, you can help your employees meet their saving requirements.
It offers them an opportunity to grow their money as per their risk appetite and provides them a corpus at the time of their retirement Superannuation is one of the most important retirement benefits for your employees. It allows them to save a portion of their income during their employment at your organization. These savings help them take care of their financial requirements post-retirement, be it their medical needs or other expenses. from investment returns that are safe and stable and thus provide the benefits in a cost-effective manner. The liability of the Life Insurance Company at any time will be limited to the balance in the policy account.
FEATURES
-
Group Superannuation Fund is a retirement benefit given to employees by the Company.
-
Normally the Company has a link with Insurance Companies for Superannuation Fund, where their contributions are paid.
-
The Company pays 15% of basic wages as superannuation contributions. There is no contribution from the employee.
-
This contribution is invested by the Fund in various securities as per the investment pattern prescribed. Interest on contributions is credited to the member's account. Normally the rate of interest is equivalent to the PF interest rate.
-
On attaining retirement age, the member is eligible to take 25% of the balance available in his/her account as a tax-free benefit.
-
The balance of 75% is put in an annuity fund, and the Insurance Company will pay the member monthly/quarterly/periodic annuity returns depending on the option exercised by the member.
-
In the case of the resignation of the employee, the employee has the option to transfer his amount to the new employer.
-
If the new employer does not have a Superannuation scheme, then the employee can withdraw the amount in the account, subject to deduction of tax and approval of the IT department, or retain the amount in the Fund, till the superannuation age.
-
The employee at the time of retirement or resignation can specify his choice for availing of the benefit. The employee has the option of commuting (i.e. taking it as a lump sum payment) 1/3rd of his accumulated fund and taking the remaining amount as pension.
-
The commuted value of retirement does not bear any tax. Only the pension will attract tax. The employee can also choose to take the entire accumulated fund as a pension ie. Without commutation.
-
No eligible employee can withdraw from the scheme while he/she is still an employee.
Renewal of the policy: On every Annual Renewal Date (ARD), the master policyholder is required to submit a written declaration about the funding status of the scheme as per the Actuary’s Certificate given in accordance with AS-15 (Revised) for superannuation liability. “NIL Contributions” will be allowed when the funding status of the scheme is in surplus and the same is supported by an actuary’s certificate in accordance with AS-15 (Revised). The policy will continue to accrue the declared interest from time to time and claims as per the scheme rules will be settled subject to the availability of the policy account value.
Tax-Benefits: Tax benefits are available as per the provisions of the Act and may be subject to amendments from time to time. It is advised to consult your tax adviser in this regard.
THERE ARE THREE OPTIONS NORMALLY THAT ARE OFFERED BY INSURANCE COMPANIES:
-
This is a Unit Linked Insurance Plan that offers various fund options for equity and debt.
-
This is a Non-participating Endowment Plan which provides a minimum floor rate and an additional interest rate every quarter.
-
This is a Participating Endowment Plan which grows your wealth with minimum floor rate and bonus additions.
-
As an employer, the annual contribution is allowed as expenditure subject to conditions under Section 36(1)(iv).
In addition, any income received by the trustees on behalf of an approved superannuation fund is exempt under Section 10(25)(iii).
Employees’ contribution towards an approved superannuation fund is eligible for deduction under Section 80C. The payment received from the superannuation fund is tax-free subject to conditions under Section 10(13).
Please note that the employer's contribution in excess of the limit specified under Section 17(2)(vii) will be taxed as a perquisite in the hands of the employee.
THIS PLAN OFFERS YOU TWO SCHEMES:
Defined Benefit: If you select the Defined Benefit Superannuation scheme, the benefits payable to the employee on retirement are decided upfront. Here, you as an employer pay the premiums for superannuation. The premiums are then invested by us and the wealth pool created under the plan is used to make claim payments on employee exits. The accumulated wealth can also be used to purchase an Annuity plan that would provide periodic pay-outs to the employee for life.
Defined Contribution: If you select the Defined Contribution Superannuation scheme, a fixed amount or a pre-decided percentage of every employee's salary is periodically paid as premiums towards their superannuation kitty. The premiums are then invested by the Insurance Company and accumulate up to the employee’s exit. The accumulated wealth is then used to purchase an Annuity plan that would provide periodic pay-outs to the employee for life.
GROUP EDLI PLAN
Employees’ Deposit Linked Insurance scheme provides for a lump sum payment to the insured’s nominated beneficiary in the event of death due to natural causes, illness or accident.
Nowadays, most organisations offer the facility of provident fund (PF). EPF (Employees’ Provident Fund Scheme 1952) and EPS (Employees’ Pension Scheme 1995) are the two different retirement saving schemes under Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, meant for salaried employees. EDLI scheme is applicable to all the factories and establishments to which the EPF & MP Act, 1952 applies. It is mandatory for every employee drawing a basic pay beyond the threshold limit per month to make contribution towards EPF & EPS. The EPF & MP Act, 1952 provided for PF and a family pension scheme for employees from 1971 onwards. However, it was felt that problems arising out of early death of the employee were left unaddressed. In view of this, the Act was amended to incorporate an insurance scheme, called the Employees’ Deposit Linked Insurance (EDLI) Scheme in 1976.
FEATURES
- EDLI scheme is applicable to employees (private organizations) who are registered under EPF.
- All such employees are automatically covered under EDLI Scheme.
- No separate application required.
- EDLI Scheme covers all employees irrespective whether they are working or retired.
- They should be a member of the EPF.
- EDLI Scheme covers employees at all times i.e. whether they are working or during non-working hours. The good part is that there is no exclusions in this scheme.
- Life Insurance coverage would be based on basic salary (Basic Salary + DA) of the employee and not gender or any tenure.
- Life Insurance coverage is applicable even for new employees on day-1 once they are enrolled in EPF.
- Minimum Life Insurance coverage is Rs 2.5 Lakhs. Maximum Life Insurance coverage is Rs 6 Lakhs.
- There is no separate nomination required in EDLI Scheme as EPF nomination is applicable to Life Insurance nomination too.
- One should note that the average wage referred is basic salary + dearness Allowance (DA) only.
OBJECTIVE OF EDLI
The objective of EDLI was to put in place a mechanism to provide employees families with security of Income after the death of the member. It was funded through contributions by the employer and central government with no contribution by the employee. EDLI scheme provides for a lump sum payment to the insured's nominated beneficiary in the event of death due to natural causes, illness or accident.
The scheme has undergone several changes since its introduction. The government no longer contributes to the scheme and the rates of benefits have also been changed many times. The contributions thus come only from the employers. A comprehensive administrative framework was set-up to ensure smooth functioning of the scheme.
According to EDLI scheme, in any organization—where group insurance scheme is not available to the employees—the employer / organisation has to contribute 0.5% of monthly basic pay (capped at maximum Rs. 6,500) as premium for the life insurance cover. All employees who are covered under their organization’s Provident Fund and are actively contributing to their PF account (age group of 18 to 85 years) are eligible for EDLI.
The employer’s contributes 0.5% of basic pay of an employee as insurance premium to the EDLI scheme every month. The benefit under the scheme is given on the basis of the provident fund balance in the subscriber’s account. For EDLI scheme, the insurance cover is variable and it is based on the subscriber’s average balance in his PF account over a period of last 12 months. The insurance cover amount is higher of the two: 20 times the average basic pay of the past 12 months (up to Rs. 6,500 per month), i.e. Rs. 1.3 lakh [Rs. 6,500 X 20] or the full amount in your PF account up to Rs. 50,000 and 40% of the balance amount = Rs. 70,000 [Rs. 50000 + (Rs. 50,000 X 40%)]. Under EDLI, an EPFO (Employees' provident Fund Organisation) subscriber gets insurance cover and gets benefit of up to Rs. 1.3 lakh in case he /he dies before superannuation.
Since the life cover provided under EDLI is comparatively low, the government has provided that against EDLI scheme an employer can approach a life insurance company for better cover to employees. The employer also has the choice to choose a higher sum assured for the employees. In this case the EPFO (Employees’ provident Fund Organisation) exempts an employer / company from EDLI. This scheme is called group insurance scheme
IS EDLI COMPULSORY?
The government has made it compulsory for every employee who earns a monthly basic salary of INR 6500 and above to enrol in EPS and EPF. Employees' Deposit-linked Insurance (EDLI) gives a default life insurance scheme which is provided by Employees' Provident Fund Organization (EPFO).
WHO IS ELIGIBLE FOR EDLI SCHEME?
All employees who are covered under their organization's Provident Fund and are actively contributing to their PF account (age group of 18 to 85 years) are eligible for EDLI. The employer's contributes 0.5% of basic pay of an employee as insurance premium to the EDLI scheme every month.
ADDITIONAL BENEFITS THROUGH RIDERS
- Group Accidental Death Benefit Rider
- Group Accelerated Terminal Illness Rider
- Group Critical Illness (Additional Benefit) Rider
- Group Total and Permanent Disability (Accident) Premier Rider
CLAIMS
The Insurance Claim Payable Amount: The claim amount of the EDLI is decided by the last drawn salary of the employee. The claim amount would be the 30 times of the salary. Along with this, you would also get a bonus. This bonus would be 50% of the balance in your EPF account. The maximum bonus would be Rs 1.5 lakh. The maximum sum insured would be Rs 6 lacs. For this calculation salary is ‘basic pay plus DA’.
Procedure To Claim EDLI Amount: In case of an unfortunate death of the employee, the nominee can claim the insured amount. However, in case there is no nominee, the legal heir can claim the amount. To claim EDLI form5 should be used. It is better to submit the claim form with EPF withdrawal form.
Claim Form Instructions:
- The claim under EDLI is admissible only if the deceased person was in active service during the death.
- The EDLI Form should be submitted along with Form 20 and for 10D (for claiming the Provident Fund dues and Pension/Withdrawal Benefit as applicable).
- It facilitates to process the benefits of the scheme in one go.
- All details should be written in BLOCK LETTERS and there should not be any overwriting.
- In case the deceased member was a married female, her Husband’s name should be mentioned in the column 1 (b) of the form.
- Details of Bank Account for receiving payment: Correct name, branch and address of the Bank where the claimant is maintaining account should be furnished as payment is sent directly to the Bank.
- For ensuring correctness of bank details, a copy of the blank/cancelled cheque should be attached with the claim form.
- The form has to be filled up separately by each claimant.
- In case the claimant is minor it should be filled up by the guardian on his / her behalf .
Documents To Be Enclosed:
- Death Certificate of the member
- Guardianship certificate if the claim on behalf of a minor family member/nominee/legal heir is by other than the natural guardian
- Succession certificate in case of claim by the legal heir
- Copy of a cancelled/blank cheque of the bank account in which payment is opted
- In case the members were last employed under an establishment exempted under the EPF Scheme 1952, the employer of such establishment should furnish the PF details of last 12 months under the Certificate part and also send an attested copy of the Member’s Nomination Form
Attestation of the Claim:
The application should be gotten attested by the employer under whom the member was last employed. In case the establishment is closed and there is no Authorised Officer to attest the claim form, it can be attested with official seal by any of the following officials:
- Magistrate
- A Gazetted Officer
- Post/Sub-Post Master
- President of the Village Panchayat where there is not Union Board
- Chairman/Secretary/Member of Municipal/District Local Board
- Member of Parliament/Legislative Assembly
- Member of CBT/Regional Committee EPF
- Manager of the Bank in which the Bank Account is maintained
- Head of any recognized educational institution
FAQ's
All the members of the Employees’ Provident Fund Scheme are covered as members of the Employees’ Deposit Linked Insurance Scheme also.
Under this Scheme, the member does not contribute any amount as contribution. However, the employer pays an amount equal to 0.5% of the total wages paid to the members as contribution.
Website may use cookies to personalize and facilitate maximum navigation of the User by this site. The User may configure his / her browser to notify and reject the installation of the cookies sent by us.
As regards Administrative charges, the employer is required to pay an amount equal to 0.01% of the wages subject to a minimum of Rs. 2/- per month.
An employer of an establishment exempted from the provisions of the Employees’ Deposit Linked Insurance Scheme is required to pay inspection charges at the rate of 0.005% subject to a minimum of Re.1/- per month.
The benefit provided under the Employees’ Deposit Linked Insurance Scheme is called Assurance Benefit. On the death of the member while in service, the nominee or any other person entitled to receive the Provident Fund benefits will, in addition to the Provident Fund, receive the Assurance Benefit under Employees’ Deposit Linked Insurance Scheme.
From 1-4-93 onwards the amount of Assurance Benefit payable is an amount equal to the average balance in the amount of deceased in the Fund during the preceding 12 months or during the period of his membership whichever is less, except where the average balance exceeds Rs. 25,000/- amount payable shall be Rs. 25,000/- plus 25% of the amount in excess of Rs.25,000/- subject to a selling of Rs. 35,000/-. The Form prescribed for claiming the Assurance Benefits under the Employees’ Deposit Linked Insurance Scheme, 1976 , is Form 5(IF).
The provisions are available as per Section 17(2A) of the Act and para 28(1) and 28(4) of the Employees’ Deposit Linked Insurance Scheme, 1976 for grant of exemption to an establishment or to an employee or to a class of employees as the case may be, from the operation of all or any of the provisions of the Scheme, where the Life Assurance benefit of the Scheme in the establishment is more beneficial than the benefits provided under the statutory Scheme.
The Scheme applies to all the establishments to which the Employees’ Provident Fund Scheme applies.
GROUP Leave Encashment Plan
Group Leave Encashment Plan is a non-linked non-participating group leave encashment product offering fund management. This plan offers interest income which gets credited to the policy at the end of financial year. The interest amount once credited to the policy account will become guaranteed. This Product offers Fund Management of employers’ liability and life cover to the employees.The Policy is offered you value by providing a platform of a large pooled fund providing smooth returns and safety through diversification backed by specialised in-house investment expertise.
HOW GROUP LEAVE ENCASHMENT PLAN WORKS?
- Actuarial valuation will be carried out at the time of inception and at regular periodic intervals to determine your liability towards leave encashment. You are expected to pay the contribution accordingly.
- Option for newly setup Gratuity Trust to pay for their past liabilities over a period of five years.
KEY BENEFITS
- Flexibility in payment of contribution: You can pay annual contributions yearly, half-yearly or quarterly
- The plan has a uniform life cover of Rs. 5000 per member
- On Retirement/ Resignation/ Termination: The amount is paid out of the corpus maintained.
- On an unfortunate Death: Accrued Leave Encashment Benefit, as per scheme rules will be payable + Basic Sum Assured as opted for by the master policy.
- Contributions
- Interest Rate
- Tax Benefits
CONTRIBUTION
The contributions made under this plan shall be made in accordance with the funding requirements as per the scheme rules. The trustee or employer or policyholder shall be required to confirm that such funding is required as per extant accounting standard governing the measurement of long term employee benefits.
The plan does not allow any top-ups, unless required to address the underfunding of the scheme as per extant accounting standard governing the measurement of long term employee benefits.
TAX BENEFITS
- The cash equivalent of the leave Encashment Benefit as and when paid by the employer is deductible from his income under section 43B (f) of the Income Tax Act.
- For the Employee the leave encashment benefit is taxable under section 15 of the Income Tax Act
- However the benefit received by the employee at the time of retirement, gets tax relief as per section 10(10AA) of Income Tax Act, subject to maximum of ten months leave.
- The amount of risk premium paid for Life Insurance cover will be treated as business expenses.
*Above tax benefits are as per Income Tax Act, 1961 and Income Tax Rules, 1962. Please consult to your Legal/ Tax expert for details.
INTEREST RATES
An Interest rate will be declared by the company at the end of each financial year. The interest rate will be credited to the policy on a pro-rata basis based on the number of days the fund has been invested with the company. An interim rate shall be declared at the start of each financial year for exits during the financial year for which interest rate is not yet declared. The interest amount once credited to the policy account will be guaranteed.
The interest rate credited to each fund and expenses charged to such funds shall be in accordance with the Board approved policy of the companyolder
ELIGIBI LITY
- Member’s Age at Entry: 18 to 69 years
- Minimum Contribution at Scheme Level: 5 Lakhs
- Minimum-Maximum Sum Assured: 5,000/- (Per Member) Fixed Member’s
- Maximum Age at Maturity: 70 years
- Policy Term (PT): One Year (Renewable)
- Minimum Size of the Group: 10 Members