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