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Life and employee benefit schemes services- LIFE NON-LIFE INSURANCE SOLUTIONS

Life Insurance is a product, which offers protection against risk of death. In case of death, the full sum assured is made available under a life assurance policy, whereas under other savings schemes, the total accumulated savings alone will be available.

Life Insurance can also be used as a means of saving for one's future. There are a number of Life Insurance products, which in addition to life cover also provide the means of investing one's income. The sum as per the policy will be received only after a period of time. This amount thus provides for old age.

After a period of 3 years, if the policyholder finds that he is unable to continue payment of premiums he can surrender a policy for a cash sum. A life insurance policy is acceptable as a collateral security for a personal loan by financial institutions. A policyholder can take a loan from his insurance company against the security of his life insurance subject to certain conditions

The Indian Income Tax Act provides tax concessions to the policyholder both on payment of premium and on the maturity amount.

Frequently asked questions

What is an ideal “sum assured” amount?
The basic idea behind life insurance is to compensate for the value of human life. In simple terms, the sum assured by the insurance policy should be sufficient to sustain the standard of living of the dependants in case of the death of the assured person. Therefore, an ideal “sum assured” amount is approximately 12 to 15 times of an individual’s annual income.
What are the basic products of life insurance?
The basic products offered by life insurance are Term (only Risk Cover), Endowment (Risk Cover plus bonus), Investment Linked Endowment (Risk Cover plus market linked investment returns) and Personal Pension.
Is surrender value taxable?
Surrender value under a Life Insurance Policy with risk cover element is normally not taxable.
Can a life insurance policy be attached by a court of law?
Yes, a life insurance policy can be attached by a court of law except if the policy is taken under Sec. 6 of The Married Women's Property Act, 1874.
Can an individual propose insurance for the life of a family member?
Yes, an individual can propose insurance for the spouse, children & dependent minor brothers & sisters.

Keyman Insurance

Key-Man Insurance (KMI) is a novel concept in business insurance. It is the insurance taken by a company on the life of a key employee in order to protect the company against the financial loss, which may occur from the employee's premature death. Taking up a KMI helps the company create an asset for itself in the form of premiums paid and added bonus.

Premiums paid by a company under a Keyman Insurance Policy qualify as eligible business expenses under Sec. 37(1) of the Income Tax Act 1961, thereby allowing the company to save on Income Tax.

Premiums paid by the company are not treated as perquisite in the hands of the Keyman.

Frequently asked questions

Can there be more than one Keyman (KM) in a company?
It is not necessary that there can only be one KM. There can be number of KMs in a company, depending upon their technical knowledge, experience, entrepreneurial vision and talents, in the context of their contribution to the success of the company.
Is maturity amount taxable?
Yes, maturity proceeds are included & taxed under the Head of "Income from Business / Profession".
What happens when a Keyman leaves the job?
When a keyman leaves the job, the policy can be transferred to the new employer or assigned to the keyman or surrendered for cash value.
Can a partnership or a proprietary firm have a Keyman Insurance?
Active partners are source of profits for the firm. The absence of such partners may cause significant loss to the firm. Therefore, Keyman Insurance on the lives of active partners is allowed, subject to certain conditions. However, Keyman Insurance for a proprietor is not allowed.
Can this be taken on by any employee of the company?
A Keyman (KM) is an Employee / Director of either gender whose services have a significant effect on the profitability of the company and whose premature death will adversely affect the profitability of the company.

Individual Pension

One may be self-employed, a chartered accountant, an engineer, a doctor, an architect or any other professional performing successfully. But continuing prosperity can't be guaranteed. If you can make a small affordable monthly contribution, you can build a substantial pension for yourself and your family and become self-dependent.

Individual pension is needed even if you are a salaried person. On retirement, you may carry home a lump sum by way of retirement benefits/ accretion of any other kind, but this amount will not last forever. Since it is difficult to identify any other source of income, it is best to build your pension benefits brick by brick. What’s more, if you pay a premium of over Rs. 10,000/- (equal. to USD 200/-) p.a., it is exempted from Income Tax as per Section 80CCC. Similarly, computed value of 25% received in one lump sum at the start of the pension is also exempted from Income tax. However, the amount of monthly Pension as & when received is taxable.

Frequently asked questions

What would be an ideal age to start pension?
The normal retirement age would be the ideal age to start pension.
What happens if the employee dies before start of pension?
If the employee dies before the start of the pension, the single/ installment premium /contribution is returned to the person claiming the money with interest and/or bonus, if any.
Once the pension has started, will the amount of pension change with the change in interest rates in the market?
No. The pension installment once fixed will not change.
Can the pension be extended to family members on the death of a pensioner?
No, the pension benefit cannot be extended to family members on the death of a pensioner. However, a choice of selecting joint life and last survivor pension is available at the inception.
How early can one start saving for pension?
A person can start saving for pension as early as the age of 18. The earlier one begins, the greater will be the effect of the compounding interest.

Employer-Employee

Employer-employee policies are also very popular in today’s market wherein the employer is the proposer and the employee’s life is insured. In such a scheme, the premiums are paid by the employer and the employee or his nominee is to benefit in the event of a claim.

Frequently asked questions

Can an employee also contribute in such a scheme?
Yes, the employee can also contribute in this scheme.
What are the tax benefits of such a scheme?
The tax benefit the employer enjoys is that the premiums paid are included as business expenses. With regard to the employee, the premiums paid are added to the salary with tax concession under sec 88.
Who is paid when a death or maturity claim is made?
On the event of death or maturity of the scheme, the company (proposer) for the benefit of the employee or his nominee is paid.
Can employees get a group discount?
No, employees cannot get group discounts because each policy on each employee's life is a separate contract.
What happens when an employee resigns?
In case an employee resigns and the employer is the proposer, the policy is assigned to the employee and all future premiums are to be paid the employee.

Group Term Assurance

Group (Term) Insurance Schemes are meant to provide life insurance protection to groups of people at a very low cost. Under Group (Term) Insurance Scheme, life insurance cover is allowed to all the members of a group without insisting upon any medical evidence, subject to some simple insurability conditions. The restrictions under a Group Term Insurance Scheme mainly relates to the size of the group, amount of cover allowable, minimum and maximum age limit for eligibility of cover (normally 18 and 60 respectively), participation of minimum percentage (say 75%) of eligible members of the group at inception and compulsory participation of all new members.

Frequently asked questions

Who pays the premium in such a scheme?
In such a scheme, the employer normally pays the premium.
Are there any tax benefits?
Yes, such a scheme does have tax benefits. The employer can claim the amount paid as premiums as business expenses.
Who is paid when a death claim is made?
On the event of death, the employer (proposer) is paid.
Can employees get a group discount?
Group discounts will not be needed as the premium itself is very low as it is a group insurance.
What happens when an employee resigns?
In case an employee resigns, the risk cover is terminated. Further, if the policy conditions permit there will be pro-rata refund of the amount paid as premium.

Personal Accident Insurance

Personal Accident Insurance provides compensation for loss of life or on injury (partial or permanent) caused by an accident. The policy is open to all age groups (6 months to 70 years) and the principal sum chosen could vary from Rs. 100,000/- (equal to USD 2,000/-) to Rs. 10 million (equal to USD 200,000/-) based on the monthly income. Depending on the size of the group a handsome discount is available.

Frequently asked questions

Is there any geographical limit on PA Insurance?
No, the PA cover is applicable all over the world.
Can time restricted cover be granted under a group PA policy?
Yes, time restricted cover be granted in an employee- employer group.
Are hospital bills due to accident also covered?
Yes, hospital bills due to accident can also be covered by payment of additional premium limited to 25% or 50% of the claim amount.
Are there any tax benefits?
Yes, such a scheme does have tax benefits. The employer can claim the premium paid as business expenses.
Is snakebite or slipping on the floor considered as an accident?
Yes, snakebite or slipping on floor is considered as an accident.

Individual / Group Health Insurance

In the unfortunate event of you or your family members meeting with an illness or accident resulting in hospitalisation, Health Insurance gives you cash-free hospitalisation in hospitals across India. Health Insurance also reimburses the pre-hospitalisation and post-hospitalisation expenses during stages of treatment up to a certain period.
In case of a group, even the maternity benefit can be covered by the payment of a small additional premium, unlike in Individual policy.

Frequently asked questions

Does this policy have any geographical limitations?
Yes, the cover is available inside the geographical boundaries of India.
Are there any tax benefits?
Yes, Individual / Group Health Insurance policies do have tax benefits. The premium paid by an individual under a Mediclaim policy is tax deductible under Sec 80 (D). Moreover, premiums paid by the employer under a group policy are allowed as business expenses.
Can pr-existing diseases be covered?
Yes, pre-existing diseases can be covered by payment of additional premium under group health and is subject to lien for some years under individual health policy.
Are dental expenses covered under the policy?
Dental expenses are only covered if these expenses are due to an accident.
Can the policy be transferred from one insurer to another insurer on renewal?
Yes. Since this is a one-year's renewable contract, the policy can be transferred from one insurer to another at the time of renewal.

Overseas Travel Health Insurance

The Travel Health Insurance policy compensates for the various perils that a traveller is exposed to whilst travelling outside India. The policy only covers future unforeseeable events and not events that have happened and are still happening or have the probability of happening before the inception of the insurance. The cover becomes operational when the insured first crosses the Indian border in the course of the overseas travel.

Frequently asked questions

How is the claim settled in foreign countries when the policy is issued in India?
A claim can easily be settled in foreign countries even if the policy is issued in India because an overseas TPA backs the insurance. TPA provides a 24-hour hotline. Upon contact, the TPA arranges an services emergency hospitalization needs during travel anywhere as per the policy cover.
Can pre existing diseases be covered?
No, pre-existing diseases cannot be covered.
Can the period of cover be extended?
Yes, the period of cover can be extended to a maximum of up to 180 days.
Is refund of premium available on early return to India?
Yes, refund of premium is available, subject to certain conditions.
Does the OMP cover accidental Death?
Yes, OMP does cover accidental death.