Bimadeals » GROUP INSURANCE

Life insurers increase in group insurance sales

bhavana — Tue, 03 Jan 2012 06:32:07 +0000

Life insurance companies have seen an increase in group insurance business, while they continue to report negative growth in individual insurance category in last eight months.

Group insurance consists of life insurance bought by companies for their employees. So, while individuals are deferring buying insurance, companies have not reduced investment in insurance for their employees.

During April-November 2011, premium collected from group insurance grew by 16 per cent to Rs 29,466.01 crore, from Rs 25386.66 crore in the same period a year ago.

Both, Life Insurance Corporation (LIC) and private insurance companies, reported growth in group insurance sales. During April-November 2011, LIC premium collected from group insurance increased by 11.9 per cent to Rs 24,567 crore, from Rs 21, 631 crore in the previous year. Whereas, new business premium for private insurers from group insurance sales jumped by over 30 per cent to Rs 4,898 crore, from Rs 3,754 crore in the previous year.

“Normally, group single premium policies consist of group gratuity and super annuity (pension) plans. This year, there was an overall trend of positive appraisals and salary hikes that pushed the employer contribution to such policies. Considering the same trend to follow next year, we expect this segment to grow consistently,” said GV Nageswara Rao, chief executive officer, IDBI Federal Life Insurance Company.

Business from sale of insurance to individuals saw declined by over 36 per cent to Rs 32,962 crore, from Rs 51,603 crore during same period in the previous year.

However, despite growth potential, some of the companies like Aegon Religare Life Insurance, Bharti Axa Life Insurance, DLF Pramerica Life Insurance and Edelweiss Tokio Life Insurance, have stayed away from group insurance business or have very low portfolio. These companies are also non-bank funded insurance joint venture companies.

P Nandagopal, chief executive officer, IndiaFirst Life Insurance Company said, “Bancassurance channel (banks selling insurance products) helps insurance companies to cater to a vast number of corporate clients who are in need of group regular premium policies such as term insurance policies. Group insurance business has a high potential of growth if the insurer provides good and efficient service to their customers.”

Companies that have reported significant growth in their group insurance portfolio include ICICI Prudential Life Insurance, Reliance Life Insurance, Canara HSBC OBC Life Insurance and IndiaFirst Life Insurance.

[Source - BS]

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Companies are investing in Group Covers

bhavana — Mon, 22 Feb 2010 16:27:53 +0000

Companies are concentrating on group cover for their employees, their aim to retain and encourage the talent of the workforce, long term well-being of the employees and so on and so forth. According to data from IRDA, Group Insurance premiums have increased 2.5 times in April-December 2009 period (Rs.17,979 crore to Rs.7,477 crore). “Companies are increasingly engaging Life Insurance firms to manage certain savings-linked pay components of employees to maximize benefits,” said SY Siddiqui, HR head, finance & IT at Maruti Suzuki India.

In a group insurance scheme, an employer pays the premium for the section of employees covered for health, gratuity and superannuation, etc. Companies can manage the pool themselves or opt for a group insurance scheme, though they prefer the expertise of life insurers for higher returns. Even a 1% extra return for every premium paid for 15-20 years can make a huge difference in the returns for employees.

Cost of group insurance for Health Insurance schemes is lesser than the individual health insurance due to minimal operational expenses thus more profitable business for Insurance Companies. They approach public as well as private firms to broaden their horizon. According to the data from IRDA, new premium collections in the group insurance category between April and December grew 63% to Rs.17,979 crore from Rs.11,059 crore a year ago. This sharp growth had helped the private insurers show 23% raise to Rs.3,740 crore in group insurance whereas in individual group insurance the growth was marginal. LIC has 80% market share in group insurance category alone and recorded a growth to 78% (Rs.14,238 crore) from sales of group insurance policies by third quarter of 2009.

Companies prefer dealings of group insurance covers to the qualified professionals because of the complexities and details involved. Public and private companies have increased the salary packages in the past two months which has inflated the gratuity and the superannuation amounts, which is characteristically fall under group insurance schemes.

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LIC – GROUP PLAN | GROUP CRITICAL ILLNESS RIDER | LIC | OVERVIEW | BENEFITS | EXCLUSIONS | TAX BENEFITS | FEATURES

bhavana — Mon, 01 Feb 2010 17:40:04 +0000

Key to a successful business is keeping your employees motivated. Happy and secured employees work better, which in turn reduces the employer’s tension. Group Insurance is an insurance which covers a group of people (like employees of a common employer or professionals in a common group).

Critical Illness product (accelerated benefit) is basically offered as an optional Rider benefit to all Employer-Employee group policyholders (both existing and new schemes) along with Group Term Insurance schemes i.e. OYRGTA ( One year renewal group term assurance ) type schemes. Schemes along with which the rider can be given shall include Group insurance, Group Gratuity (CA), Group Leave Encashment and Group insurance in conjunction with Superannuation. The Benefit will not be extended to spouses or dependants. Only full time permanent employees who are actively at work will be eligible for Critical Illness cover. The relevant premium is to be paid by the Group Policyholder.

BENEFITS

1. The Critical Illness Accelerated benefit is payable upon the first incidence of any of the 8 specified diseases and evidenced as per the diagnostic criteria specified. The rider shall terminate on payment of the Critical Illness benefit.
2. The Group Critical illness (Accelerated) Benefit pays a lump sum amount as a percentage of Sum assured out of the Sum assured under the life cover in the event of occurrence of 8 diseases covered under the rider.
3. No Critical Illness Benefit shall become payable to a member if the disease occurs within 90 days of the start of the coverage for that member of the scheme. This period of 90 days shall be called “Waiting period”.
4. In case of death nothing is payable under this rider. However, under the base plan (i.e., the scheme on which the rider is opted for) benefits as under shall become payable :

1. A benefit equal to base sum assured if no critical illness benefit is payable or has been paid earlier.
2. If critical illness benefit is payable or already paid, the benefit is reduced by the amount of critical illness benefit payable or already paid. In other words, the difference between the base sum assured and the critical illness benefit already paid is payable on death.

EXCLUSIONS

Diseases in the presence of an HIV infection.
Diseases that have previously occurred in the life of the member of the scheme i.e. the benefit is payable only if the disease is a first incidence , regardless of whether the earlier incidence occurred before the individual was covered or whether the insured was covered by us or another insurer.
Any disease occurring within 90 days of the start of the coverage for each member of the scheme. (I.e. during the waiting period).
No payment will be made for any claim directly or indirectly caused by, based on, arising out of, or howsoever, to any Critical Illness for which care, treatment, or advice was recommended by or received from a Physician, or which first manifested itself or was contracted before the start of the policy period, or for which claim has or could have been made under any earlier policy.
Any congenital condition.
Alcohol or solvent abuse or taking of drugs, narcotics or psychotropic substances unless taken in accordance with the lawful directions and prescription of a registered medical practitioner.
Failure to seek or follow medical advice.
War, invasion, act of foreign enemy, hostilities(whether war be declared or not),armed or unarmed truce, civil war ,mutiny, rebellion, revolution, insurrection, military or usurped power, riot or civil commotion, strikes.
Taking part in any naval, military or air force operation during peace time.
Participation by the member of the scheme in any flying activity, except as a bona fide, fare-paying passenger of a recognised airline on regular routes and on a scheduled timetable.
Participation by the member of the scheme in a criminal or unlawful act.
Engaging or taking part in professional sport(s) or any hazardous pursuits, including but not limited to , diving or riding or any kind of race, underwater activities involving the use of breathing apparatus or not, hunting, mountaineering, parachuting , bungee-jumping.
Nuclear contamination, the radio active, explosive or hazardous nature of nuclear fuel materials or property contaminated by nuclear fuel materials or accident arising from such nature.
Intentional self inflicted injury, suicide or attempted suicide, while sane or insane.
Existing diseases are not covered.

Additional exclusions may be disease-specific and would be incorporated into the definition of the disease.

TAX BENEFITS

All benefits under the policy are also subject to the Tax Laws and other financial enactments as they exist from tome to time.
The premium payable are exempted under section 80D of Income Tax act.

FEATURES

1. The Group critical illness rider benefit to employees is given as an add on benefit to the Group policy which has an element of life cover.
2. The Group Critical Illness rider allowable for each member shall be a minimum of 20 % of sum assured under the base plan and shall not exceed 100% of the sum assured under the base plan subject to minimum of Rs. 50 Thousands and maximum of Rs 20 lac per member.
3. All members of the attached policy should participate at inception and all eligible new members should compulsorily participate.
4. The diseases covered under the rider (subject to certain exclusions) are :

Cancer
Coronary Artery (Bye pass) Surgery
Heart attack (Myocardial infarction)
Stroke
Kidney failure (End stage renal disease)
Aorta (Surgery of Aorta)
Heart valve replacement
Major Burns.

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LIC – GROUP PLAN | GROUP GRATUITY PLUS PLAN | LIC | OVERVIEW | ADVANTAGES | BENEFITS – TAX BENEFITS | FEATURES | RISK BORNE BY INDIVIDUAL MEMBERS

bhavana — Mon, 01 Feb 2010 17:26:39 +0000

LIC brings you LIC’s GRATUITY PLUS PLAN , a unit linked plan for management of Gratuity Funds.This plan is different from the traditional Cash Accumulation Plan as the returns under the Plan are linked to the performance of the chosen fund . GRATUITY PLUS PLAN is suitable for companies who desire to entrust Gratuity Fund management to an insurer and wish to have the flexibility of choice of investments.

ADVANTAGES

Choice of 4 funds to meet various risk appetites.
Flexibility in structuring the Gratuity Costs based on performance of Fund.
Facility of Switching between various funds. One switch every year is free of cost.
It provides for Life Insurance cover at a very minimal cost. Cover can be equal to the gratuity payable for anticipated service. Alternatively, the company can also choose for each member a uniform level of cover equal to a minimum of one months salary or more .
There is no bid offer spread under this scheme.
Scheme can be surrendered at any time. There is no surrender penalty imposed.
Hassle Free Administration of Scheme
Assistance for execution of legal documents and installation of scheme.

BENEFITS

Gratuity Benefits to Members whenever payable as per Rules of the Scheme shall be paid to the Policyholder by debiting the requisite no of units to the Policyholder’s Unit Account at NAV applicable at that time.
In case of death of member, life insurance cover as opted for by Policyholder will also be paid by the Corporation.
The policy can be surrendered at any time. The benefit available on surrender of the policy will be the value of total number of units held in the Policyholder’s Unit Account at the time of surrender.

At all times the Policyholder’s unit account should be sufficient to cover the relevant charges and benefits payable at such point of time, subject to a minimum balance of Rs. Five lacs in the Policyholder’s Unit Account. In case the Policyholder’s Unit Account falls below this limit, the policy shall compulsorily be terminated and the balance amount in the policy holder’s Unit Account will be refunded to the policy holder.

TAX BENEFITS

The provisions relating to the approved Superannuation Scheme are set out in Part ‘B’ of the Fourth Scheme of the Income-Tax Act, 1961 and Part XIII of the Income Tax Rules , 1962. The income tax concession will be available only if the scheme is approved by the CIT.

The annual contribution is treated as a deductible business expense in term of Section 36(1) (iv) of the I.T. Act.
In terms of a Notification issued by the Central Board of Direct Taxes .80% of the contribution (s) towards the past service liability are treated as deductible business expenses spread over in the subsequent years of payment.
The employee’s contribution , in the case of the Contributions scheme qualifies for exemption under Section 80C of the Income-Tax Act.

FEATURES

The Master Policyholder has the choice to invest the contributions in respect of individual member in any one of the following four funds:

Fund Type	Corporate Investment in Government / Government Guaranteed Securities/Corporate debt ( Rated AA and above )	Short-term Investment such as money market Instruments	Investment in Listed Equity Share	Risk Profile
Bond Fund	Not less than 80%	100 %	Nil	Low risk
Income Fund	Not less than 70%	Not more than 90%	Not more than 20%	Low to Medium risk
Balanced Fund	Not less than 60%	Not more than 80%	Not more than 30%	Medium risk
Growth Fund	Not less than 50%	Not more than 70%	Not more than 40%	Medium to High risk

Note : The various funds offered are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.

The allocation charge shall be as follows :

Size of the Contribution (Rs.)	Allocation Rate
Size of the Contribution (Rs.)	1st Year	2nd Year	3rd Year	4th Year onwards
Less than or equal to Rs.1.50 Crores	97%	98%	99%	100%
Above Rs.1.50 Crores to Rs. 10 Crores	98%	99%	99%	100%
Above Rs.10 crores and more	98.5%	99%	99%	100%

Other charges : Mortality charges, Administrative charges, Fund management charges, switching charges, surrender charges and service tax.
The Net Asset Value (NAV) of each fund will be computed daily.

SPECIAL FEATURES

AUTO COVER : If the contributions are not received on the policy anniversary the policy becomes paid up. However the term Assurance Cover will be provided to the members by way of Auto Cover for a period of five years from the policy anniversary for which the contributions have not been received from the policyholder. The Term Assurance cover equal to Future Service Gratuity or number of months salary subject to a minimum of one month salary of members as opted by the policyholder will be provided as Auto Cover for which the mortality charges together with service tax if any, will be deducted by canceling appropriate number of units from the Unit Account . At the end of five years from the policy anniversary for which the contributions have not been received from the policyholder if the policy is still in paid up condition the policy shall be compulsorily terminated.

CONTRIBUTIONS : Contributions are payable on every policy anniversary.

RISKS BORNE BY THE INDIVIDUAL MEMBERS

The Value of the units is subject to market and other risks and there can be no assurance that the objectives of any of the above funds will be achieved. The value of units within each Fund can go up or down depending on the different factors affecting the capital markets and may also be affected by changes in the general level of interest rates and other economic factors. All benefits under the policy are also subject to the Tax Laws and other Financial enactments as they exist from time to time.

Please know the associated risks and the applicable charges from LIC’s P&GS Units or Policy Document .

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bhavana — Mon, 01 Feb 2010 17:13:09 +0000

‘Group Mortgage Redemption Assurance Scheme’, is a Group Insurance Scheme for the borrowers of Housing/Vehicle Loans from Financial Institutions where Loan is recovered under EMI. Under the Scheme, the premium is payable in a single installment covering a decreasing life cover. Insurance cover every year will be almost equal to the loan outstanding at the anniversary date of each borrower.

PREMIUM DETERMINATION

Under the scheme, the premium depends upon:

Age (nearer Birthday) at entry of the member into the Scheme.
Outstanding loan amount at entry date.
Term of loan.
Schedule of repayment.
Rate of interest with which the loan was availed.

Any borrower may become member of this scheme . The minimum term of assurance is 3 years. Existing Borrowers can join the scheme with certain conditions within 6 months of the commencement of scheme.

In case of death of the member during the coverage period , life cover on the anniversary date preceding the date of death is payable .The claim proceeds are used to square off the outstanding loan.

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LIC – GROUP PLAN | GROUP LEAVE ENCASHMENT SCHEME | LIC | OVERVIEW | BENEFITS | PREMIUM PAYMENTS | NATURE OF LIABILITY | FEATURES

bhavana — Mon, 01 Feb 2010 16:50:49 +0000

Many employers are providing Leave Encashment benefit in addition to other retirement benefits to their employees which is a lumpsum amount payable to the employees or their dependants on retirement, death, disablement, voluntary retirement etc.

BENEFITS

On the exit of an employee or encashment of leaves during the service the Leave Encashment amount will be paid from the Fund of the scheme maintained with LIC.
On the death of an employee, in addition to his / her leave encashment benefit, his/her family will be entitled to the amount of Insurance Cover, which will be tax-free.
The Life Insurance Corporation of India will do the Actuarial Valuation and will provide necessary certificate as per AS-15.
The amount of Term Insurance Premium paid for Life Insurance Cover will be treated as business expenses.

PREMIUM PAYMENT

End-of-the-year leave encashment facility available to employees, can be a huge liability to the company. So can be Medical Leave Encashment, if provided for. To meet this need of entrepreneurs and businesses, LIC has introduced Group Leave Encashment Scheme. Just pay a yearly premium, fund your leave encashment liability and let LIC take care of your worries.

NATURE OF LIABILITY

The amount depends upon the leave to the credit of the employee and his/ her salary at the time of exit. Liability is of increasing nature as it is linked with salary as well as leave position.

As per the amended section 209 (3) of the Company’s Act 1956 and Accounting Standard (AS-15) dated January, 1995, the employers have to account for the liability in respect of leave encashment facility, if any, available to the employees and to provide for the same in their Annual Accounts. It is, therefore, necessary for the companies to ascertain liability in respect of Leave Encashment facilities, if any, available to the employees and provide for the same in the books of accounts every year. It helps the employers in ascertaining the true cost of their products and services.

FEATURES

Group Leave Encashment Schemes (GLES) of LIC helps the employers in funding of their lave encashment liability. The salient features of the scheme are as follows:-

The Company will submit the employees’ data and rules for Leave Encashment. LIC will make actuarial valuation and find out the funding requirements which shall be quoted to the company. The company will contribute as per the advice of LIC.
A uniform life cover per employee or graded cover will be provided under One Year Renewable Group Term Assurance Plan of LIC. A small term insurance premium will be charged in addition to contributions for funding.
A Running Account will be maintained under the scheme and the contributions (excluding term assurance premium) will be credited to this account and all claims except term assurance cover will be settled out of the Running Account. Interest at the rate declared by LIC from time to time will be credited to the Running Account at the end of the financial year.

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bhavana — Mon, 01 Feb 2010 16:34:41 +0000

The people working in the metropolitan cities, occupied as they are in their day to-day activities where inflation is inevitable, find difficult to provide adequate security for their families, Individual insurance with high premium in fact does not provide adequate insurance protection. Their need for insurance protection during service coupled with adequate savings for carefree retired life remains unfulfilled. Keeping this in mind, LIC has come out with an attractive insurance scheme viz. Group Savings Linked Insurance scheme at a very low cost. Central Government has a similar scheme with minor modifications. Semi-Government Organisations, Public Sector Organisations and also Large private business houses and industrial enterprises have introduced this scheme, the salient features of which are as under:

OBJECTIVES

Protection at low cost without individual evidence of health.
Attractive returns on savings to meet post retirement needs.
Simple procedures for granting life cover to large groups under one umbrella.

INTRODUCTION OF THE POLICY

a) The Scheme can be introduced by employers provided certain percentage of employees is willing to join the Scheme.

b) For the new entrants to the Company, the membership of the Scheme is compulsory.

PREMIA

It is decided on the basis of Group size and the occupation of the group.Premium has two components i.e. Risk Premium and Savings Premium.Risk Premium is utilized to offer life cover and the Savings Premium is accumulated in members account.

BENEFITS

Double accident benefit can be allowed to the extent of the Sum Assured for an extra Premium.

TAX BENEFITS

Employees’ total contribution, savings as well as risk premium is entitled for income-tax rebate under Sec. 80C of the Income Tax Act. The entire claim amount including interest earned payable on retirement or leaving service or on death is free from income-tax. The premium paid by the employer towards insurance cover is treated as business expenses.

INTEREST ON SAVINGS

The present rate of interest allowed on saving portion of premium is 8% compounding yearly.

ELIGIBILITY REQUIREMENTS

Any employee irrespective of his present state of health is eligible to join the scheme subject to certain conditions. The only insurability condition is that the employee should not be absent on medical ground on the date of commencement of the scheme. All employees who have not crossed the retirement age are eligible to join the scheme. All future employees have to join the scheme compulsorily.

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bhavana — Mon, 01 Feb 2010 16:02:54 +0000

An organization today, has not only to man the various positions with competent and trained personnel but also has to create an environment wherein they can give their best and derive a sense of well-being, a sense of fulfillment and security and take pride in their continued association with the organization. Provision of pension may be an attraction for such persons to continue in the organization and give their best to the organization, as with continuous improvement in longevity a regular income even after retirement has become a necessity. To provide the pension benefits to employees, an employer has two alternatives under the provisions of Rule 89 of Income Tax Rules 1962.

Create a privately managed trust fund and as and when a member retires, purchase annuity from LIC to provide pension for such retiring member.
Entrust the Management of the Pension Fund to an Insurer by purchasing its Group Superannuation Scheme.

ADVANTAGES

The LIC managed Pension fund has the following added and distinct advantages:-

An attractive and competitive yield on the fund will be credited to Fund A/c.
The problem of liquidity gets automatically eliminated as soon as the fund is managed by LIC.
We conduct free actuarial valuations of the funds administered by us from time to time.
The Administration of the fund is carried out by us in a scientific manner and claims are promptly settled.
Group Insurance in conjunction with the Group Superannuation Scheme can be taken by an Organization to provide for an attractive lump sum payment on the unfortunate death of a member while in service, at very nominal cost.

BENEFITS

The employer contributes a certain fixed percentage of salary of each member. Such Contributions are accumulated by LIC and the accumulated amount is utilized to provide various benefits as mentioned below.

1) ON RETIREMENT:
On Retirement of a member, the corpus (contributions plus interest) is utilized to provide the pension as per his choice.

2) ON DEATH:
The Pension is payable on the life of the beneficiary. Corpus is utilized towards the payment of pension of the type the beneficiary may opt and the benefit so received is tax free. A lump sum payable by way of death besides the pension, if the employer has taken Group Insurance Scheme in conjunction with the Group Superannuation Scheme.

3) ON WITHDRAWAL:

He can get the equitable interest transferred to the Superannuation Scheme of the new employer or opt for immediate or deferred pension.

TAX BENEFITS

The annual contribution is treated as a deductible business expense in term of Section 36(1) (iv) of the I.T. Act.
In terms of a Notification issued by the Central Board of Direct Taxes .80% of the contribution (s) towards the past service liability are treated as deductible business expenses spread over in the subsequent years of payment.
The employee’s contribution , in the case of the Contributions scheme qualifies for exemption under Section 80C of the Income-Tax Act.

PENSION OPTIONS

Life Pension ceasing at death.
Life Pension with Return of Capital and Group Pension Terminal Bonus on death.
Life Pension guaranteed for 5,10,15 or 20 years and life thereafter.
Joint Life Pension payable on the last survivor of the employee and spouse.
Joint Life Pension payable to the last survivor of the employee and spouse with return of capital on the death of the last survivor. If desired , 1/3rd of the pension can be commuted at vesting.

ELIGIBILITY REQUIREMENTS

It is not obligatory or statutory on the part of the employer to provide for pension to all employees. It is entirely upto him to decide to which class/ classes of employees he desires to extends the scheme. The eligibility conditions may be defined on the basis of designation or salary. (However, after the categories are specified, employer cannot discriminate between the employees and thus extends the scheme uniformly).

CONTRIBUTION

The maximum annual contribution that an employer can make to the Pension Fund and Provident Fund is restricted by the Income Tax Provisions to 27% of the annual salary (basic plus D.A.) The annual contributions are treated as deductible business expenses.

Who pays it ?

Mostly the employer contributes, but is so desired, both the employer and the employees may contribute, in which case the scheme is called a Contributory Pension Fund Scheme.

GROUP INSURANCE SCHEME IN CONJUNCTION WITH SUPERANNUATION SCHEME:

The members of the Group Superannuation scheme can be covered under Group Insurance in conjunction with superannuation scheme so as to provide death risk cover while in service subject to certain conditions.

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bhavana — Sun, 31 Jan 2010 18:33:52 +0000

ADVANTAGES

Choice of 4 funds to meet various risk appetites.
Flexibility in structuring the Gratuity Costs based on performance of Fund.
Facility of Switching between various funds. One switch every year is free of cost.
It provides for life insurance cover at a very minimal cost. Cover can be equal to the gratuity payable for anticipated service. Alternatively, the company can also choose for each member a uniform level of cover equal to a minimum of one months salary or more .
There is no bid offer spread under this scheme.
Scheme can be surrendered at any time. There is no surrender penalty imposed.
Hassle Free Administration of Scheme
Assistance for execution of legal documents and installation of scheme.

BENEFITS

Gratuity Benefits to Members whenever payable as per Rules of the Scheme shall be paid to the PolicyHolder by debiting the requisite no of units to the PolicyHolder’s Unit Account at NAV applicable at that time.
In case of death of member, life insurance cover as opted for by Policyholder will also be paid by the Corporation.
The policy can be surrendered at any time. The benefit available on surrender of the policy will be the value of total number of units held in the PolicyHolder’s Unit Account at the time of surrender.

TAX BENEFITS:

The annual contribution is treated as a deductible business expense in term of Section 36(1) (iv) of the I.T. Act.
In terms of a Notification issued by the Central Board of Direct Taxes .80% of the contribution (s) towards the past service liability are treated as deductible business expenses spread over in the subsequent years of payment.
The employee’s contribution , in the case of the Contributions scheme qualifies for exemption under Section 80C of the Income-Tax Act.

FEATURES

The Master Policyholder has the choice to invest the contributions in respect of individual member in any one of the following four funds:

Fund Type	Corporate Investment in Government / Government Guaranteed Securities/Corporate debt ( Rated AA and above )	Short-term Investment such as money market Instruments	Investment in Listed Equity Share	Risk Profile
Bond Fund	Not less than 80%	100 %	Nil	Low risk
Income Fund	Not less than 70%	Not more than 90%	Not more than 20%	Low to Medium risk
Balanced Fund	Not less than 60%	Not more than 80%	Not more than 30%	Medium risk
Growth Fund	Not less than 50%	Not more than 70%	Not more than 40%	Medium to High risk

Note : The various funds offered are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.

The allocation charge shall be as follows :

Size of the Contribution (Rs.)	Allocation Rate
Size of the Contribution (Rs.)	1st Year	2nd Year	3rd Year	4th Year onwards
Less than or equal to Rs.1.50 Crores	97%	98%	99%	100%
Above Rs.1.50 Crores to Rs. 10 Crores	98%	99%	99%	100%
Above Rs.10 crores and more	98.5%	99%	99%	100%

Other charges : Mortality charges, Administrative charges, Fund management charges, switching charges, surrender charges and service tax.
The Net Asset Value (NAV) of each fund will be computed daily.

SPECIAL FEATURES

RISKS BORNE BY THE INDIVIDUAL MEMBER

Please know the associated risks and the applicable charges from LIC’s P&GS Units or Policy Document .

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bhavana — Sun, 31 Jan 2010 18:18:01 +0000

First let us know wat EDLI is…

All employees to whom the Employee’s Provident Fund and Miscellaneous Provision Act , 1952 applies, have a Statutory liability to subscribe to Employee’s Deposit Linked Insurance Scheme, 1976 to provide for the benefit of Life insurance to all their employees. Under the scheme as amended with effect from 24th June,2000 the Insurance Benefit is equal to the average balance to the credit of the deceased employee in the Provident Fund during the last 12 months, provided that where such balance exceeds Rs.35,000, insurance cover would be equal to Rs.35,000 plus 25% of the amount in excess of Rs.35,000 subject to a maximum of Rs.60,000. Thus if the lenth of service is not adequate and/ or the salary is low the average balance may be substantially less and such the benefit to the employee’s family is either inadequate or non-existent.

The contribution @ 0.50% of each employee’s salary is payable by the Employer to the Provident Fund Authorities.

The ALTERNATE…

However, under Sec. 17(2A) of the act, the employer may be exempted from contributing to this scheme, if he/she has provided for better insurance benefits through alternative scheme. LIC Group Insurance Scheme in lieu of EDLI has been accepted as one such better alternative.

ADVANTAGES

to the employer

The premium payable by the employer is usually less than the total contribution being paid by the employer to R.P.F.C; particularly when the salary level is high and average age of the group is low.
Settlement of claim is quicker, LIC requires only the death certificate and the Claim Form from the employer.
Premium paid by the employer is treated as normal business expenses for Income-Tax purpose.

to the employee

Each employee is covered for a sum assured ranging between 5,000 to 2,00,000 depending upon the current salary and service put in from day one irrespective of the actual balance in the Provident Fund. Alternatively every employee/ worker can be covered for a uniform sum assured which will be decided depending upon the group size.

BENEFIT

ACCIDENT BENEFIT:
Double accident benefit can be allowed to the extent of the Sum Assured for an extra Premium.

HOW TO GO ABOUT IT:

Put up notice for the knowledge of the employees that you are going in for LIC’s Scheme in lieu of EDLI.
Apply to the Regional Provident Fund Commissioner under Sec.17 (2A) of the E.P.F. and M.P. Act 1952 to exempt you from EDLI Scheme. The application should be accompanied by the prescribed requirements including the Rules of the Proposed Group Insurance scheme. Central PF Commissioner, has authorized the R.P.F.C. to grant exemption from the 1st of the month in which the application for relaxation is submitted. LIC also offers necessary guidance to the employers for seeking relaxation.

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