Benefits of Group savings linked insurance and it’s Objectives

1) Objectives of the scheme:
  • 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.

2) Introduction of the scheme:
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.

3) Premier:
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.

4) Accident benefit: Double accident benefit can be allowed to the extent of the sum assured for an extra premium.

5) Interest on savings: The present rate of interest allowed on saving portion of premium is 8% compounding yearly.

6) Eligibility to join the scheme: 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.

7) Tax benefits: Employees' total contribution, savings as well as risk premium is entitled for incometax 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 incometax. The premium paid by the employer towards insurance cover is treated as business expenses.

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