LIFE INSURANCE – GROUP PLAN | KOTAK SUPERANNUATION GROUPLAN| KOTAK MAHINDRA | OVERVIEW | ADVANTAGES & ELIGIBILITY | PREMIUM PAYMENTS | MANAGEMENT OF INVESTMENTS | BENEFITS – RIDERS | TERMINATION |RISK FACTORS

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).

OVERVIEW

In today’s times, when the prospect of outliving retirement savings is larger than ever, few employees take the time to plan their long-term financial goals or have the discipline to systematically save for their retirement years. As an employer of choice, you can help your employees tremendously by assisting in their retirement planning and in turn increase employee retention. The solution is in Kotak Life Insurance’s Superannuation Grouplan.

The Kotak Superannuation Grouplan (KSGP) is a uniquely flexible product that addresses the needs of both the employers and the employees. Under this group Life Insurance Plan, individual employee accounts are invested in one of the many investment portfolios on a unitized basis as per each employee’s choice. Parameters such as eligibility criteria for fund membership, vesting guidelines, contribution rates, transfer rules and voluntary contributions are all designed as per each employer’s unique needs.

ADVANTAGES

For employer

You know that your employees are your most valuable assets. By helping to provide for retirement, through Kotak Superannuation Grouplan, you help increase employee retention and motivation. Moreover:

• According to the Finance Act 2006, annual contributions made by an approved superannuation trust up to Rs. 1,00,000 per employee can be claimed as deductible business expenses under section 115 WB (1C) read with section 115 WC (1)(b) of the Income Tax Act, 1961. Any contribution beyond the prescribed limit will qualify for Fringe Benefit Tax.
• Income earned on investments by an approved superannuation trust is tax-exempt under section 10 (25) (iii) of the Income Tax Act, 1961.
• The amount of deduction available on initial as well as ordinary annual contribution to an approved superannuation fund shall not exceed 27% (including the contribution to Provident Fund) of the employee’s annual basic salary for each year of his service under section 36 (1)(iv) of the Income Tax Act, 1961.

For employees

Group insurance plans like KSGP give your employees unparalleled flexibility and peace of mind.

• Any employee contribution towards an approved superannuation fund qualifies for tax deduction under section 80C of the Income Tax Act, 1961.
• At the time of retirement or death, the employee or the employee’s nominee (as the case may be) can commute one-third of the accumulated fund amount as a tax-free lump sum under section 10 (10A) and section 10 (13) of the Income Tax Act, 1961. The balance amount must be used to buy annuity from either Kotak Life Insurance or any life insurer approved by IRDA.
• At the time of withdrawal from service, the employee has the option of either transferring his/ her superannuation account to his/ her new employer (if the latter provides for that) or commute one-third of the accumulated fund and buy an annuity from the balance amount from either Kotak Life Insurance or any life insurer approved by IRDA

ELIGIBILITY REQUIREMENTS

• Minimum group size for superannuation: 10 members
• Minimum entry age: As specified in the Trust Rules or18 years, whichever is higher.
• Maximum cover age: As specified in the Trust Rules, or 65 years, whichever is lower.
• Minimum term: One year. This is an annually renewable plan.

INVESTMENT OPTIONS

Risk Factors

• Unit-linked life insurance products are different from traditional insurance products and are subject to risk factors.
• The premium paid in unit-linked Life Insurance Policies are subject to investment risks associated with capital markets. The NAVs of the units may go up or down based on the performance of the fund and factors influencing the capital market, and the insured is responsible for his/ her decisions.
• Kotak Mahindra Old Mutual Life Insurance Ltd is only the name of the company and Kotak Superannuation Grouplan is only the name of the unit-linked life insurance contract and does not in any way indicate the quality of the contract, its future prospects or returns.
• Please know the associated risks and the applicable charges, from your insurance agent or the intermediary or policy document of the insurer.
• The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.
• The past performance of other plans of the company is not necessarily indicative of the future performance of any of these funds.
• All benefits payable under the policy are subject to change in tax laws and other financial enactments, in force from time to time. Please consult your tax adviser for details

Investment Management Philosophy Kotak’s group investment philosophy works on the principles of transparency, flexibility and well-defined investment portfolios

Calculation of Net Asset Value (NAV) = (Market value of investment held by the fund +/- the expenses incurred in the purchase/sale of assets + value of current assets + any accrued income net of fund management charges – value of current liabilities- provisions) divided by (number of units existing at the valuation date)

The appropriation price shall apply in a situation when the company is required to purchase the assets to allocate the units at the valuation date. This shall be the amount of money that the company should put into the fund in respect of each unit it allocates in order to preserve the interests of the existing policyholders.

The expropriation price shall apply in a situation when the company is required to sell assets to redeem the units at the valuation date. This shall be the amount of money that the company should take out of the fund in respect of each unit it cancels in order to preserve the interests of the continuing policyholders

The appropriation or expropriation price (whichever prevails on the date concerned) will be used with respect to portfolio valuations for policyholders in addition to terms for full or partial surrenders, maturity and death settlement options.

The risk profile of different asset classes is as under

Type of Asset Risk Profile Govt. & Govt. approved securities Low Corporate Bonds Medium Infrastructure as defined by IRDA Medium Money Market and Other Liquid assets Very Low Listed Equities High

Premium Allocation Charges Premium allocation charge would be 0.5% of contribution for this group life insurance product. This is a percentage of premiums appropriated towards charges from the premium received. The balance known as allocation rate constitutes that part of premium which is utilized to purchase (investment) units for the policy.

Fund Management Charges This is a charge levied as a percentage of the value of assets and will be appropriated by adjusting the NAV. Each of the investment options operates in a totally transparent manner, with the NAV of each fund posted on our website daily, along with benchmarks for each fund. Investment management charges vary depending on the fund size and the investment option chosen as indicated by the employer. These charges can be altered at the sole discretion of the company, subject to a maximum of 2% of assets under management, with prior approval from IRDA.

Surrender Charges This is a charge levied on the unit fund at the time of surrender of contract. In case the policyholder wants to terminate/surrender this group life insurance policy, an exit fee is applicable depending upon the duration of the fund. In case a policy is terminated within one year, the company will charge 2% of the fund value as surrender charge while the charge would be 1% of the fund value if the policy is terminated within two years. No exit charge will be charged if the termination occurs after two years^.

Switching Charges Kotak Life Insurance’s KSGP doesn’t levy any fee for switching between fund options^. Thus your employees have the ability to reallocate their portfolios an unlimited number of times without incurring additional charges. But the company reserves the right to impose a switching charge subject to prior approval from IRDA.

^except in case of Kotak Fixed Maturity Plan Fund, where an early exit penalty is charged as a percentage of fund value. The applicable charges are as follows:

Time elapsed since commencement of Kotak Fixed Maturity Plan <=25% of total maturity period >25% and <=50% of total maturity period >50% and <=75% of total maturity period >75% and <100% of total maturity period Charge 2.5% 1.5% 0.75% 0.5%

Non-forfeiture Benefits If the employer/ trustees stop paying the contributions, the existing monies will continue to remain invested in the respective funds. The usual fund management charges will continue to be deducted. The policyholder will have an opportunity to revive the contract within two years from the due date of the last unpaid contribution. If any member retires/ dies/ withdraws during this period, the cash value of the units held on his behalf will become payable in the manner provided for in the rules of the scheme.

The employer may pay the current as well as the arrears of contributions at any time within two years from the due date of the last unpaid contribution. The monies paid will be applied to purchase units in the funds chosen by the employer/ trustees at the NAVs as per the scheme rules. No handling charges will apply. At the end of the allowed period of revival — i.e. two years — if the contract is not revived, the contract shall be terminated (by giving prior notice), paying the surrender value.

Termination of this Group Life Insurance Policy The policy and/ or the benefit in respect of any member can be terminated at the sole discretion of the company, if the value of the units is not sufficient to meet any charges, taxes or expenses, or if it is found that the member data provided was inaccurate or there was any material suppression of member data within the provisions of Section 45 of Insurance Act, 1938.

Free Look Period The policyholder is offered a 15-day free look period for this group life insurance product, from the date of receipt of this policy. During this period, the policyholder may choose to reconsider his/ her decision to hold this policy, and may return it. If the policyholder chooses to return the policy, he/ she will then be entitled to a refund of the premium paid after adjustments for expenses for medical examination, stamp duty and proportionate risk premium for the period of cover.

Insurance Ombudsman The company will endeavor to promptly and effectively address policyholders’ grievances with regards to group life insurance. However, in case the policyholder is not satisfied with the response of the company, he/she may also approach the Insurance Ombudsman located in his/ her region. Details of the offices of the Ombudsman across the country are made available on the website of the company at www.kotaklifeinsurance.com and will also be made available to the policyholder on request.

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