Group Term Life Insurance

Group Term Life Insurance including Employee Deposit Linked Insurance

A group term life (GTL)  schemeoffered by an employer / organisation  provides a financial  benefit  in the event of the death of  an  employee / member to the nominated beneficiary. Under this policy The employer / organisation can avail of additional covers for disability and illnesses  based on the risk profile of the employee.GTL can be offered to corporate  entities / organisations  as an employer- employee cover and also to institutions in the unorganised sector on a non employer- employee basis

In addition to this considering the  provident fund notifications as stipulated by EPFO from time to time, employers in order  to comply with the regulations avail of a GTL cover in lieu of EDLI  for a minimum benefit of INR 362,000

Taking into account the risk profile of the group we at AIBPL would help you design and  structure a suitable benefit and  also identify the appropriate insurance company

Gratuity

Gratuity is a statutory benefit payable to an employee in return for his/her long term service with an employer. As per the Payment of Gratuity Act, 1972, any organization employing 10 or more employees has to pay Gratuity at the rate of 15 days’ salary for each year of completed service to every employee on cessation of his/her employment after a continuous period of 5 years;

• On Superannuation
• On resignation/retirement or
• Death or disablement due to accident or disease

The obligation to pay Gratuity is statutory in nature and is governed by relevant provisions of the following statutes/norms in addition to the above Payment of Gratuity Act, 1972.

• Income Tax Act, 1961
• Income Tax Rules,1962 and
• Accounting Standard-15 of the Indian Accounting Standards, ICAI

A gratuity scheme can be managed on a pay as you go basis or by the  setting up of an irrevocable trust and either managing the  funds in-house or outsourcing the funds to an insurance company coupled with  a future service gratuity benefit in the form of a life insurance cover.

Our team at AIBPL would assist  you in selecting  the right insurer / fund manager through a comprehensive evaluation process based on the  credentials and market standing of the insurers. Value added support in the form of trust documentation and its review and follow up with insurer for regulatory follow ups would be provided by us

Superannuation

Superannuation  is a retirement plan set up by a company for the benefit of its employees  in order to offer  adequate income security    during their retirement life. The scheme is constituted by  way of contributions by the employer or employee or both  to a fund  to develop a corpus  that would provide the  employees  a regular stream of income at predefined intervals following their  exit from service  viz  retirement, resignation or death. In India superannuation benefits are  non statutory in nature.

Also known as pension, superannuation can be divided into 2 categories

• Defined benefit :A defined benefit plan guarantees a certain payout (pension) at retirement, according to a fixed formula which usually depends on the member’s salary and the number of years’ membership in the plan. The liability / obligation of a DB superannuation scheme lies with  the employer and hence the contributions to the fund are done by the employer. Actuarial valuation of the liability is required in a DB scheme
• Defined contribution :A defined contribution plan will provide a payout (pension) at retirement that is dependent upon the amount of money contributed and the performance of the investment vehicles utilized. Contribution can be made by the employer or the employee or both. No actuarial valuations are required as the liability of the employer ends once the contributions are made

Funds can be managed in house through an income tax approved superannuation  trust or through fund management to a life insurance company.

Superannuation- Conceptual Understanding

Superannuation scheme has 3 phases which can be depicted as follows

Our team at AIBPL would assist  you in selecting  the right insurer / fund manager through a comprehensive evaluation process based on the  credentials and market standing of the insurers. Value added support in the form of trust documentation and its review and follow up with insurer for regulatory follow ups would be provided by us

Leave Encashment

Monetary benefit earned by surrendering earned leave standing to one’s credit at the time of exiting service or while at work at specified intervals  is known as leave encashment or leave salary.

Leave encashment is usually provided on earned leave Earned leave means the leave accrued to the employee in proportion to the  work done by him/her. The employee can avail the accumulated leave during his service tenure or it can be encashed at the time of retirement or leaving the job. Sick and casual leaves are usually not encashed and have to availed or would get lapsed.

Scheme benefit

• Basis of leave salary is different for different organizations.  Most PSU’s provide it on gross salary, whereas for the private sector , it varies between industry segments and organizations. For e.g .Most MNC’s offer LE benefits on gross salary.
• For PSU’s maximum LE ceiling is  300 days and in some cases it is 240 days.  In the private sector it is comparatively lower ranging between 30 days  to 180 days . Some of the  traditional Indian private sector companies offer benefits in line with the government benefits.
• Leave encashment benefits are usually valued on last drawn salary

In the absence of  tax benefits on LE funding most of the employers usually settle the benefits from their  cash flows . However there are few  primarily PSU’s who have funded it.

Our team at AIBPL would assist  you in selecting  the right insurer / fund manager through a comprehensive evaluation process based on the  credentials and market standing of the insurers.