Group LIC Scheme

Group Insurance Schemes


1. Meaning

Insurance which is issued to a group, such as an employer, credit union, or trade

association, and which provides coverage for individuals and sometimes their

dependents.

Group Insurance Scheme is life insurance protection to groups of people. This scheme is

ideal for employers, associations, societies etc. and allows you to enjoy group benefits at

really low costs.

2. Schemes offered by LIC


GROUP LIC'S SUPERANNUATION PLUS

LIC’s SUPERANNUATION PLUS PLAN, is a unit linked defined contribution plan for

management of Superannuation Funds. This plan is different from the traditional Cash

Accumulation Plan as the returns under the Plan are linked to the performance of the chosen

fund. SUPERANNUATION PLUS PLAN is suitable for companies with employees desiring to

have flexibility of choice of investment.

Advantages of the LIC’s GROUP SUPERANNUATION PLUS PLAN:

1. Choice of 4 funds to meet various risk appetites.

2. Flexibility of building the fund subject to acceptable level of risk.

3. Facility of Switching between various funds. Four switches every year are free of cost.

4. There is no bid offer spread under this scheme.

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5. Scheme can be surrendered at any time after the date of payment of first contribution.

The benefit on surrender will be subject to appropriate charges.

6. Maintenance of individual member-wise account and hassle Free Administration of

Scheme.

7. Assistance for execution of legal documents and installation of scheme

Features

1. The Master Policyholder has the choice to invest the contributions in respect of individual

member in any one of the following four funds:

Fund Type Investment in

Government /

Government

Guaranteed

Securities/Corporate

debt

Short-term

Investment

such as money

market

instruments

Investment in

Listed Equity

Share

Details and

objectives

of the fund for

risk/return

Bond Fund Not less than 70% Not more than

30%

Nil Low risk

Income

Fund

Not less than 60% Not more than

30%

Not less than

10% & Not

more than 40%

Steady Income—

Lower to Medium

risk

Balanced

Fund


30%

Not less than

20% &

Not more than

50%

Balance Income

and

growth— Medium

risk

Growth

Fund


30%

Not less than

30% &

Long term Capital

growth— High

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Not more than

60%

risk

Note: The various funds offered are the names of the funds and do not in any way indicate the

quality of these plans, their future prospects and returns.

1. The allocation charge shall be 0.5% in the first year and nil in the subsequent years.

2. Other charges: Administrative charges, Fund management charges, switching charges,

surrender charges and service tax.

3. The Policyholder has the choice of investing the Member wise allocated contributions in

any one of the four fund types. Individual member-wise fund will be maintained. Any top

up of the contributions in respect of the members can be made at any time during the

membership period.

4. The Net Asset Value (NAV) of each fund will be computed daily.

Special Features

1. Flexibility of Contributions: Policyholder may choose to pay contributions at any time

during the policy year.

2. Top-Up (Additional Contribution): The policyholder can pay top-up of the contribution

in respect of members at any time during the membership period.

Benefits Under The Scheme

1. The amount available in respect of the member shall be the value of units in the

member’s fund. A portion of the amount can be commuted if the scheme rules allow. The

balance amount will be utilized to purchase immediate annuity, in respect of the

member/beneficiary certified by Policyholder, at the then prevailing annuity rates. Both

the commuted value and the annuity in respect of the member/beneficiary will be paid to

policyholder. However the same can also be paid to the beneficiary directly with the 3


consent of the policyholder. On exit of a member the amount available shall be the value

of units. The value of units in respect of the member shall be the number of units held

under the chosen fund type multiplied by the corresponding NAV.

2. The policy can be surrendered at any time after the date of payment of first contribution.

The benefit available on surrender of the policy shall be the total of value of units in

respect of all Members taken together less appropriate surrender charge.

At all times the Policyholder’s unit account should be sufficient to cover the relevant charges and

benefits payable at such point of time, subject to a minimum balance of Rs. Five lacs in the

Policyholder’s Unit Account. In case the Policyholder’s Unit Account falls below this limit, the

policy shall compulsorily be terminated and the balance amount in the policy holder’s Unit

Account will be refunded to the policy holder.

Tax Benefits

The provisions relating to the approved Superannuation Scheme are set out in Part 'B' of

the Fourth Scheme of the Income-Tax Act, 1961 and Part XIII of the Income Tax Rules,

1962. The income tax concession will be available only if the scheme is approved by the

CIT.

1. The annual contribution is treated as a deductible business expense in term of Section

36(1) (iv) of the I.T. Act.

2. In terms of a Notification issued by the Central Board of Direct Taxes .80% of the

contribution (s) towards the past service liability are treated as deductible business

expenses spread over in the subsequent years of payment.

3. The employee's contribution, in the case of the Contributions scheme qualifies for

exemption under Section 80C of the Income-Tax Act.

Risks Borne By The Individual Member

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The Value of the units is subject to market and other risks and there can be no assurance that the

objectives of any of the above funds will be achieved. The value of units within each Fund can

go up or down depending on the different factors affecting the capital markets and may also be

affected by changes in the general level of interest rates and other economic factors. All benefits

under the policy are also subject to the Tax Laws and other Financial enactments as they exist

from time to time.

Group (Term) Insurance Scheme

A) Nature of the Scheme

Group (term) Insurance Scheme is meant to provide life insurance protection to groups of

people. Administration of the scheme is on group basis and cost is low. Under Group (Term)

Insurance Scheme, life insurance cover is allowed to all the members of a group subject to some

simple insurability conditions without insisting upon any medical evidence. Scheme offers

covers only on death and there is no maturity value at the end of the term.

B) Premium Chargeable:

Group (Term) Insurance Scheme is at present offered under One Year Renewable Group term

assurance plan (OYRGTA). Every year on Annual Renewal date LIC charges the premium

depending upon the changes in size and age distribution of the age group.

C) Different Schemes:

Group (term) Insurance Scheme has a number of varieties. The Scheme may provide for a

uniform cover to all members of the group or graded covers for different categories of members,

cover for all amounts of outstanding housing loans or vehicle advances, or some other benefits 5


(e.g., life cover to supplement pension or PF benefits in case of death). The schemes may have

add-ons like Double Accident Benefit, Critical Illness Benefit, Disability benefit etc.

D) General Features of various Group Insurance Schemes:

1. PREMIUM:

The premium under such scheme may be wholly paid by the employer or the Nodal

Agency. However, the scheme may be contributory i.e. the members may also contribute.

2. DOUBLE ACCIDENT BENEFIT:

Double Accident Benefit, i.e. payment of double the sum assured on death due to

accident (without permanent disability benefit), may be allowed under Group Insurance

Schemes for an extra premium.

3. ELIGIBILITY:

For Group Insurance Scheme in lieu of EDLIS the insurability condition is that should be

a member of the Provident Fund Scheme of the employer. For other GI Schemes of

employer-employee groups the insurability condition is that the member should not be

absent on ground of sickness on the entry date. For all non-employer-employee Group

Schemes the basic insurability condition is that the member should be in good health on

the date of entry.

4. ADMINISTRATION OF THE SCHEME:

At the commencement and thereafter on each Annual Renewal Date, the Group

Policyholder will have to send all the member's data (and particulars of the new entrants

from time to time) to the P & GS unit of LIC. Detailed OYRGTA premium calculation

will be made on each Annual Renewal Date.

When a claim arises, the particulars of the respective member are to be intimated together with

the claim form and death certificate.

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Group Insurance Scheme in Lieu Of EDLI

What is EDLI?

All employees to whom the Employee's Provident Fund and Miscellaneous Provision Act

, 1952 applies, have a Statutory liability to subscribe to Employee's Deposit Linked

Insurance Scheme, 1976 to provide for the benefit of Life insurance to all their

employees. Under the scheme as amended with effect from 24th June, 2000 the insurance

benefit is equal to the average balance to the credit of the deceased employee in the

Provident Fund during the last 12 months, provided that where such balance exceeds

Rs.35, 000, insurance cover would be equal to Rs.35, 000 plus 25% of the amount in

excess of Rs.35, 000 subject to a maximum of Rs.60, 000. Thus if the length of service is

not adequate and/ or the salary is low the average balance may be substantially less and

such the benefit to the employee's family is either inadequate or non-existent.

The contribution @ 0.50% of each employee's salary is payable by the Employer to the

Provident Fund Authorities.

The Better Alternative

However, under Sec. 17(2A) of the act, the employer may be exempted from

contributing to this scheme, if he/she has provided for better insurance benefits through

alternative scheme. LIC's Group Insurance Scheme in lieu of EDLI has been accepted as

one such better alternative.

Advantages To The Employer :

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1. The premium payable by the employer is usually less than the total contribution being

paid by the employer to R.P.F.C; particularly when the salary level is high and average

age of the group is low.

2. Settlement of claim is quicker; LIC requires only the death certificate and the Claim

Form from the employer.

3. Premium paid by the employer is treated as normal business expenses for Income-Tax

purpose.

Advantages To The Employee:

Each employee is covered for a sum assured ranging between 5,000 to 2, 00,000

depending upon the current salary and service put in from day one irrespective of the

actual balance in the Provident Fund. Alternatively every employee/ worker can be

covered for a uniform sum assured which will be decided depending upon the group size.

Accident Benefit:

Double accident benefit can be allowed to the extent of the Sum Assured for an extra

Premium.

Steps To Introduce The Scheme

1. Put up notice for the knowledge of the employees that you are going in for LIC's Scheme

in lieu of EDLI.

2. Apply to the Regional Provident Fund Commissioner under Sec.17 (2A) of the E.P.F. and

M.P. Act 1952 to exempt you from EDLI Scheme. The application should be

accompanied by the prescribed requirements including the Rules of the Proposed Group

Insurance scheme. Central PF Commissioner has authorized the R.P.F.C. to grant

exemption from the 1st of the month in which the application for relaxation is submitted.

LIC also offers necessary guidance to the employers for seeking relaxation.8


GROUP GRATUITY SCHEME

LIC brings you LIC’s GRATUITY PLUS PLAN, a unit linked plan for management of Gratuity

Funds. This plan is different from the traditional Cash Accumulation Plan as the returns under

the Plan are linked to the performance of the chosen fund. GRATUITY PLUS PLAN is suitable

for companies who desire to entrust Gratuity Fund management to an insurer and wish to have

the flexibility of choice of investments.

Advantages Of The LIC’S GROUP GRATUITY PLUS PLAN

1. Choice of 4 funds to meet various risk appetites.

2. Flexibility in structuring the Gratuity Costs based on performance of Fund.

3. Facility of Switching between various funds. One switch every year is free of cost.

4. It provides for life insurance cover at a very minimal cost. Cover can be equal to the

gratuity payable for anticipated service. Alternatively, the company can also choose for

each member a uniform level of cover equal to a minimum of one months salary or more.

5. There is no bid offer spread under this scheme.

6. Scheme can be surrendered at any time. There is no surrender penalty imposed.

7. Hassle Free Administration of Scheme

8. Assistance for execution of legal documents and installation of scheme.

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Features

1. The Master Policyholder has the choice to invest the contributions in respect of individual

member in any one of the following four funds:

Fund Type Corporate

Investment in

Government /

Government

Guaranteed


debt ( Rated AA and

above )

Short-term

Investment

such as money

market

Instruments

Investment in

Listed Equity

Share

Risk Profile

Bond Fund Not less than 80% 100 % Nil Low risk

Income

Fund


90%

Not more than

20%

Low to Medium

risk

Balanced

Fund


80%

Not more than

30%

Medium risk

Growth

Fund


70%

Not more than

40%

Medium to High

risk

Note: The various funds offered are the names of the funds and do not in any way

indicate the quality of these plans, their future prospects and returns. 10


2. The allocation charge shall be as follows :

Size of the Contribution

(Rs.)

Allocation Rate

1st Year 2nd Year 3rd Year 4th Year

onwards

Less than or equal to Rs.1.50

Crores

97% 98% 99% 100%

Above Rs.1.50 Crores to Rs.

10 Crores

98% 99% 99% 100%

Above Rs.10 crores and

more

98.5% 99% 99% 100%

3. Other charges: Mortality charges, Administrative charges, Fund management charges,

switching charges, surrender charges and service tax.

4. The Net Asset Value (NAV) of each fund will be computed daily.

Special Features

1. Auto Cover: If the contributions are not received on the policy anniversary the policy

becomes paid up. However the term Assurance Cover will be provided to the members

by way of Auto Cover for a period of five years from the policy anniversary for which

the contributions have not been received from the policyholder. The Term Assurance

cover equal to Future Service Gratuity or number of month’s salary subject to a minimum

of one month salary of members as opted by the policyholder will be provided as Auto

Cover for which the mortality charges together with service tax if any will be deducted 11


by cancelling appropriate number of units from the Unit Account. At the end of five years

from the policy anniversary for which the contributions have not been received from the

policyholder if the policy is still in paid up condition the policy shall be compulsorily

terminated.

2. Contributions: Contributions are payable on every policy anniversary.


1. Gratuity Benefits to Members whenever payable as per Rules of the Scheme shall be paid

to the Policyholder by debiting the requisite no of units to the Policyholder’s Unit

Account at NAV applicable at that time.

2. In case of death of member, life insurance cover as opted for by Policyholder will also be

paid by the Corporation.

3. The policy can be surrendered at any time. The benefit available on surrender of the

policy will be the value of total number of units held in the Policyholder’s Unit Account

at the time of surrender.

At all times the Policyholder’s unit account should be sufficient to cover the relevant charges

and benefits payable at such point of time, subject to a minimum balance of Rs. Five lacs in the


policy shall compulsorily be terminated and the balance amount in the policy holder’s Unit

Account will be refunded to the policy holder.

Tax Benefits:




CIT.

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Risks Borne By The Individual Member





under the policy are also subject to the Tax Laws and other Financial enactments as they exist

from time to time.

GROUP SUPERANNUATION SCHEME

An organization today, has not only to man the various positions with competent and trained

personnel but also has to create an environment wherein they can give their best and derive a

sense of well-being, a sense of fulfillment and security and take pride in their continued

association with the organization. Provision of pension may be an attraction for such persons to

continue in the organization and give their best to the organization, as with continuous

improvement in longevity a regular income even after retirement has become a necessity. To

provide the pension benefits to employees, an employer has two alternatives under the provisions

of Rule 89 of Income Tax Rules 1962.

1. Create a privately managed trust fund and as and when a member retires, purchase

annuity from LIC to provide pension for such retiring member.

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2. Entrust the Management of the Pension Fund to an Insurer by purchasing its Group

Superannuation Scheme.

Advantages Of The LIC Managed Pension Fund:

The LIC managed Pension fund has the following added and distinct advantages:-

1. An attractive and competitive yield on the fund will be credited to Fund A/c.

2. The problem of liquidity gets automatically eliminated as soon as the fund is managed by

LIC.

3. We conduct free actuarial valuations of the funds administered by us from time to time.

4. The Administration of the fund is carried out by us in a scientific manner and claims are

promptly settled.

5. Group Insurance in conjunction with the Group Superannuation Scheme can be taken by

an Organization to provide for an attractive lump sum payment on the unfortunate death

of a member while in service, at very nominal cost.

Superannuation Scheme Provided by LIC

The employer contributes a certain fixed percentage of salary of each member. Such

Contributions are accumulated by LIC and the accumulated amount is utilized to provide

various benefits as mentioned below.

Benefits:

1. ON RETIREMENT

On Retirement of a member, the corpus (contributions plus interest) is utilized to provide the

pension as per his choice.14


2. ON DEATH

The Pension is payable on the life of the beneficiary. Corpus is utilized towards the payment

of pension of the type the beneficiary may opt and the benefit so received is tax free. A lump

sum payable by way of death besides the pension, if the employer has taken Group Insurance

Scheme in conjunction with the Group Superannuation Scheme.

3. ON WITHDRAWAL

He can get the equitable interest transferred to the Superannuation Scheme of the new

employer or opt for immediate or deferred pension.

Pension Options Provided By LIC:

1. Life Pension ceasing at death.

2. Life Pension with Return of Capital and Group Pension Terminal Bonus on death.

3. Life Pension guaranteed for 5, 10, 15 or 20 years and life thereafter.

4. Joint Life Pension payable on the last survivor of the employee and spouse.

5. Joint Life Pension payable to the last survivor of the employee and spouse with return of

capital on the death of the last survivor. If desired, 1/3rd of the pension can be commuted

at vesting.

Eligibility Condition:

It is not obligatory or statutory on the part of the employer to provide for pension to all

employees. It is entirely up to him to decide to which class/ classes of employees he

desires to extend the scheme. The eligibility conditions may be defined on the basis of

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designation or salary. (However, after the categories are specified, employer cannot

discriminate between the employees and thus extends the scheme uniformly).

Contribution:

The maximum annual contribution that an employer can make to the Pension Fund and

Provident Fund is restricted by the Income Tax Provisions to 27% of the annual salary

(basic plus D.A.) The annual contributions are treated as deductible business expenses.

Who Pays Contribution?

Mostly the employer contributes, but is so desired, both the employer and the employees

may contribute, in which case the scheme is called a Contributory Pension Fund Scheme.

Tax Benefits:




CIT.






16




Group Insurance Scheme In Conjunction With Superannuation

Scheme:

The members of the Group Superannuation scheme can be covered under Group

Insurance in conjunction with superannuation scheme so as to provide death risk

cover while in service subject to certain conditions.

GROUP SAVINGS LINKED INSURANCE SCHEME

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:

A. 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.

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B. 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.

C. Premia:

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.

D. Accident Benefit:

Double accident benefit can be allowed to the extent of the Sum Assured for an extra

Premium.

E. Interest On Savings:

The present rate of interest allowed on saving portion of premium is 8% compounding

yearly.

F. Eligibility To Join The Scheme:

Any employee irrespective of his present state of health is eligible to join the scheme

18


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.

G. Tax Benefits:

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.

GROUP LEAVE ENCASHMENT SCHEME

Many employers are providing Leave Encashment benefit in addition to other retirement

benefits to their employees which is a lumpsum amount payable to the employees or their

dependants on retirement, death, disablement, voluntary retirement etc.

Funding of leave encashment:

End-of-the-year leave encashment facility available to employees, can be a huge

liability to the company. So can be Medical Leave Encashment, if provided for. To

meet this need of entrepreneurs and businesses, LIC has introduced Group Leave

Encashment Scheme. Just pay a yearly premium, fund your leave encashment liability

and let LIC take care of your worries.

Nature Of Liability

The amount depends upon the leave to the credit of the employee and his/ her salary

at the time of exit. Liability is of increasing nature as it is linked with salary as well as

leave position.

19


As per the amended section 209 (3) of the Company's Act 1956 and Accounting

Standard (AS-15) dated January, 1995, the employers have to account for the liability

in respect of leave encashment facility, if any, available to the employees and to

provide for the same in their Annual Accounts. It is, therefore, necessary for the

companies to ascertain liability in respect of Leave Encashment facilities, if any,

available to the employees and provide for the same in the books of accounts every

year. It helps the employers in ascertaining the true cost of their products and

services.

The Features:

Group Leave Encashment Schemes (GLES) of LIC helps the employers in funding of

their lave encashment liability. The salient features of the scheme are as follows:-

1. The Company will submit the employees' data and rules for Leave Encashment. LIC will

make actuarial valuation and find out the funding requirements which shall be quoted to

the company. The company will contribute as per the advice of LIC.

2. A uniform life cover per employee or graded cover will be provided under One Year

Renewable Group Term Assurance Plan of LIC. A small term insurance premium will be

charged in addition to contributions for funding.

3. A Running Account will be maintained under the scheme and the contributions

(excluding term assurance premium) will be credited to this account and all claims except

term assurance cover will be settled out of the Running Account. Interest at the rate

declared by LIC from time to time will be credited to the Running Account at the end of

the financial year.

Benefits:

20


1. On the exit of an employee or encashment of leaves during the service the Leave

Encashment amount will be paid from the Fund of the scheme maintained with LIC.

2. On the death of an employee, in addition to his / her leave encashment benefit, his/her

family will be entitled to the amount of Insurance Cover, which will be tax-free.

3. The Life Insurance Corporation of India will do the Actuarial Valuation and will provide

necessary certificate as per AS-15.

4. The amount of Term Insurance Premium paid for Life Insurance Cover will be treated as business

expenses.

GROUP MORTGAGE REDEMPTION ASSURANCE

SCHEME

‘Group Mortgage Redemption Assurance Scheme’, is a Group Insurance Scheme for the

borrowers of Housing/Vehicle Loans from Financial Institutions where Loan is recovered under

EMI. Under the Scheme, the premium is payable in a single installment covering a decreasing

life cover. Insurance cover every year will be almost equal to the loan outstanding at the

anniversary date of each borrower.

Under the scheme, the premium depends upon:

1. Age (nearer Birthday) at entry of the member into the Scheme.

2. Outstanding loan amount at entry date.

3. Term of loan.

4. Schedule of repayment.

5. Rate of interest with which the loan was availed.21


Any borrower may become member of this scheme . The minimum term of assurance is 3

years. Existing Borrowers can join the scheme with certain conditions within 6 months of the

commencement of scheme.

In case of death of the member during the coverage period ,life cover on the anniversary date

preceding the date of death is payable .The claim proceeds are used to square off the

outstanding loan.

GROUP CRITICAL ILLNESS RIDER

Critical Illness product (accelerated benefit) is basically offered as an optional Rider benefit to

all Employer-Employee group policyholders (both existing and new schemes) along with Group

term insurance schemes i.e. OYRGTA (One year renewal group term assurance) type schemes.

Schemes along with which the rider can be given shall include Group insurance, Group Gratuity

(CA), Group Leave Encashment and Group insurance in conjunction with Superannuation. The

Benefit will not be extended to spouses or dependants. Only full time permanent employees who

are actively at work will be eligible for Critical Illness cover. The relevant premium is to be paid

by the Group Policyholder.

Features :

1. The Group critical illness rider benefit to employees is given as an add on benefit to the

Group policy which has an element of life cover.

2. The Group Critical Illness rider allowable for each member shall be a minimum of 20 %

of sum assured under the base plan and shall not exceed 100% of the sum assured under

the base plan subject to minimum of Rs. 50 Thousands and maximum of Rs 20 lac per

member.

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3. All members of the attached policy should participate at inception and all eligible new

members should compulsorily participate.

4. The diseases covered under the rider (subject to certain exclusions) are :

1. Cancer 2. Coronary Artery (Bye pass) Surgery 3. Heart attack (Myocardial

infarction) 4. Stroke 5.Kidney failure (End stage renal disease) 6. Aorta (Surgery of

Aorta) 7. Heart valve replacement 8.Major Burns.

Benefits :

1. The Critical Illness Accelerated benefit is payable upon the first incidence of any of the 8

specified diseases and evidenced as per the diagnostic criteria specified. The rider shall

terminate on payment of the Critical Illness benefit.

2. The Group Critical illness (Accelerated) Benefit pays a lump sum amount as a percentage

of Sum assured out of the Sum assured under the life cover in the event of occurrence of

8 diseases covered under the rider.

3. No Critical Illness Benefit shall become payable to a member if the disease occurs within

90 days of the start of the coverage for that member of the scheme. This period of 90

days shall be called “Waiting period”.

4. In case of death nothing is payable under this rider. However, under the base plan (i.e.,

the scheme on which the rider is opted for) benefits as under shall become payable :

o A benefit equal to base sum assured if no critical illness benefit is payable or has been

paid earlier.

o If critical illness benefit is payable or already paid, the benefit is reduced by the

amount of critical illness benefit payable or already paid. In other words, the

difference between the base sum assured and the critical illness benefit already paid is

payable on death.

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Exclusions:

1. Diseases in the presence of an HIV infection.

2. Diseases that have previously occurred in the life of the member of the scheme i.e. the

benefit is payable only if the disease is a first incidence , regardless of whether the earlier

incidence occurred before the individual was covered or whether the insured was covered

by us or another insurer.

3. Any disease occurring within 90 days of the start of the coverage for each member of the

scheme. (I.e. during the waiting period).

4. No payment will be made for any claim directly or indirectly caused by, based on, arising

out of, or howsoever, to any Critical Illness for which care, treatment, or advice was

recommended by or received from a Physician, or which first manifested itself or was

contracted before the start of the policy period, or for which claim has or could have been

made under any earlier policy.

5. Any congenital condition.

6. Alcohol or solvent abuse or taking of drugs, narcotics or psychotropic substances unless

taken in accordance with the lawful directions and prescription of a registered medical

practitioner.

7. Failure to seek or follow medical advice.

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8. War, invasion, act of foreign enemy, hostilities(whether war be declared or not),armed or

unarmed truce, civil war ,mutiny, rebellion, revolution, insurrection, military or usurped

power, riot or civil commotion, strikes.

9. Taking part in any naval, military or air force operation during peace time.

10. Participation by the member of the scheme in any flying activity, except as a bona fide,

fare-paying passenger of a recognised airline on regular routes and on a scheduled

timetable.

11. Participation by the member of the scheme in a criminal or unlawful act.

12. Engaging or taking part in professional sport(s) or any hazardous pursuits, including but

not limited to , diving or riding or any kind of race, underwater activities involving the

use of breathing apparatus or not, hunting, mountaineering, parachuting , bungee-

jumping.

13. Nuclear contamination, the radio active, explosive or hazardous nature of nuclear fuel

materials or property contaminated by nuclear fuel materials or accident arising from

such nature.

14. Intentional self inflicted injury, suicide or attempted suicide, while sane or insane.

15. Existing diseases are not covered.

Additional exclusions may be disease-specific and would be incorporated into the definition of

the disease.

Tax Benefits :

1. All benefits under the policy are also subject to the Tax Laws and other financial

enactments as they exist from time to time.

2. The premium payable are exempted under section 80D of Income Tax act.

25


GRATUITY PLUS

LIC’s GRATUITY PLUS PLAN , a unit linked plan for management of Gratuity Funds. This

plan is different from the traditional Cash Accumulation Plan as the returns under the Plan

are linked to the performance of the chosen fund . GRATUITY PLUS PLAN is suitable for

companies who desire to entrust Gratuity Fund management to an insurer and wish to have

the flexibility of choice of investments.

Why Is LIC’S GRATUITY PLUS PLAN The Best Choice?

o This scheme comes to you from the country’s leading insurer backed by more than 16

crore policyholders and an asset size around Rs 4, 50,000 crores.

o Choice of 4 funds to meet various risk appetites.

o Flexibility in structuring the Gratuity Costs based on performance of Fund.

o Facility of Switching between various funds. One switch every year is free of cost.

26


o It provides for life insurance cover at a very minimal cost. Cover can be equal to the

gratuity payable for anticipated service. Alternatively, the company can also choose for

each member a uniform level of cover equal to a minimum of one months’ salary or

more.

o There is no bid offer spread under this scheme.

o Scheme can be surrendered at any time. There is no surrender penalty imposed.

o Hassle Free Administration of Scheme

o Assistance for execution of legal documents and installation of scheme.

Salient Features :

Fund Type

(1)

Corporate

Investment in

Government /

Government

Guaranteed


debt rated AA and

above and debt

instruments that

possess the

certificate rated

AA+

and above.

(2)

Short-term

investment

such as money

market

instruments

including CP

rates PE & above

and

short term deposits

with

the Scheduled

commercial banks,

Govt.

Securities.)Inclusiv

Investment in

Listed Equity

Shares

(4)

Risk Profile

27


e of (2)

( 3)

Bond Fund

Income Fund

Balanced Fund

Growth Fund

Not less than 80%

Not less than 70%

Not less than 60%

Not less than 50%

100%

Not more than 90%

Not more than 80%

Not more than 70%

Nil

Not more than

20%

Not more than

30%

Not more than

40%

Low

Low to

Medium

Medium

Medium to

High

The Company will have the choice to invest in any one of the following funds

Note :The various funds offered are the names of the funds and do not in any way indicate the

quality of these plans , their future prospects and returns

Contributions will be allotted to the Fund at the following rate and will depend on the size and

year of the contribution and will be as under:

Size of the Contribution (Rs.) Allocation Rate

1st year 2nd year 3rd year 4 t h Y e a r

Onwards

Less than or equal to Rs.1.50

Crores

97% 98%. 99% 100%

Above Rs.1.50 Crores to Rs. 10

Crores

98% 99% 99% 100%

Above Rs.10 crores and more 98.5% 99% 99% 100%

28


After deduction of the applicable charges, the balance amount will be applied to purchase units

of the Fund type chosen. The Net Asset Value (NAV) of each fund will be computed daily. The

Corporation shall arrange to inform the Policyholder the number of units and the value of the

Unit Account at least once in a year or at any time on request. At any time , the value of the

Policyholder Unit account shall be the number of units in the account multiplied by the NAV of

the Units on the date of calculation. The Policyholder’s Unit Account will be subject to

deduction of charges as specified herein.

Charges under the Plan:

i) Premium Allocation Charge

This is a percentage of the contribution appropriated towards charges from the contribution

received. This charge will depend on the size and year of the contribution and will be as under :

Size of the Contribution (Rs.) Allocation Charges

1st

Year

2nd year 3rd

year

4 t h Y e a r

Onwards

Less than or equal to Rs.1.50 Crores 3% 2% 1% Nil

Above Rs.1.50 Crores to Rs. 10

Crores

2% 1% 1% Nil

Above Rs.10 crores and more 1.5% 1% 1% Nil

ii) Fund Management Charge

29


This is a charge levied as a percentage of the value of Assets and shall be appropriated by

adjusting the Net Asset Value. These are dependent on the selected type of fund and shall be

charged at the time of calculation of NAV. The fund management charge per annum for different

funds is given below:

Growth Fund Balanced Fund Income Fund Bond fund

0.80% 0.75% 0.70% 0.65%

iii) Policy Administration Charge

This charge shall represent the expenses other than those covered by Premium Allocation

Charges and the Fund Management Charge. In the first year an amount of Re 0.20 per thousand

Term Assurance Cover granted to members will be charged. From the second year onwards, a

fixed administrative charge of Rs.10/- per member subject to a minimum of Rs.2000/- and a

maximum of Rs.10000/- will be charged to the Policyholder Unit Account by canceling

appropriate number of units ,at the beginning of the policy anniversary every year . In addition,

an amount of Re 0.20 per thousand for the incremental Term Assurance Cover if any over the

cover granted in the previous year will be charged by canceling appropriate number of units out

of the Policyholder’s Unit Account at the NAV applicable at the time.

Note: Incremental Term Assurance Cover is the difference between Total Term Assurance cover

as on the current policy anniversary and the previous policy anniversary.

iv) Surrender Charge

This is a charge levied on the Unit Fund at the time of Surrender of the Contract. However, there

is no Surrender Charge under this Policy .

v) Switching Charges

This charge is levied on switching of monies from one fund to another as described above. The

Policyholder can switch between any of the fund types , at any time provided contributions are

30


being received regularly under the policy. In a given policy year, the policyholder can make one

switch free of charge. Subsequent switches in that policy year shall be subject to a switching

charge of 0.1% of Policyholders Unit account subject to a minimum of Rs.1000 per switch and

maximum of Rs.50000 per switch.

vi) Mortality Charge

This is the cost of life insurance cover to be granted to the members .Mortality charges shall be

charged based on the age of each member and the Term Assurance Sum Assured Granted on the

commencement of the policy and on every policy anniversary.

Term Assurance Sum assured shall be the Future Service Gratuity or number of months salary

subject to a minimum of one month salary of members as desired by the Policyholder.

vi) Charges to cover Service Tax

Service tax is payable to the Government of India and shall be charged on the Mortality

charge.

vii) Bid/Offer Spread

Nil.

All the charges except Premium allocation charge and Mortality charge are reviewable with prior

approval of IRDA and they will be subject to the following maximum limit :-

- Policy Administration Charge - Rs 50/- per member subject to a minimum of Rs 5000/-

and a maximum of Rs 25000/-.

- Fund Management Charge -The Maximum for each Fund will be as follows:

i. Bond Fund 2.0% p.a of Unit Fund

ii. Income Fund 2.0% p.a of Unit Fund

iii. Balanced Fund 2.5% p.a of Unit Fund

iv. Growth Fund 3.0% p.a of Unit Fund

31


- Service Tax Charge - Service Tax Charge will be Fixed depending upon the Rates fixed by the

Government from time to time.

- Switching Charges - 0.5% of value of Policyholders Unit account.

Special Features

1. AUTO COVER: If the contributions are not received on the policy anniversary the policy

becomes paid up. However the term Assurance Cover will be provided to the members

by way of Auto Cover for a period of five years from the policy anniversary for which

the contributions have not been received from the policyholder. The Term Assurance

cover equal to Future Service Gratuity or number of months salary subject to a minimum

of one month salary of members as opted by the policyholder will be provided as Auto

Cover for which the mortality charges together with service tax if any, will be deducted

by cancelling appropriate number of units from the Unit Account . At the end of five

years from the policy anniversary for which the contributions have not been received

from the policyholder if the policy is still in paid up condition the policy shall be

compulsorily terminated.

2. FLEXIBILITY OF CONTRIBUTIONS: Contributions are payable on every policy

anniversary.


• Gratuity Benefits to Members whenever payable as per Rules of the Scheme shall be paid to the

Policyholder by debiting the requisite no of units to the Policyholder’s Unit Account at NAV

applicable at that time.

• In case of death of member, life insurance cover as opted for by Policyholder will also be paid

by the Corporation.

• The policy can be surrendered at any time. The benefit available on surrender of the policy will

be the value of total number of units held in the Policyholder’s Unit Account at the time of

surrender.

32


At all times the Policyholder’s unit account should be sufficient to cover the relevant charges and

benefits payable at such point of time, subject to a minimum balance of Rs. Five lacs in the


policy shall compulsorily be terminated and the balance amount in the Policyholder’s Unit

Account will be refunded to the Policyholder.

How to install the Scheme :

• Pass a resolution for creation of Gratuity Trust Fund.

• Execute the Trust Deed and appoint Trustees for administering the scheme. If Trust already

exists, execute a Deed of Variation.

• Apply to Commissioner of Income Tax for approval under Part C of the Fourth Schedule of the

Income Tax Act 1961

• Forward to LIC, Master Proposal signed by Trustees, employee data , copies of Trust Deed,

Scheme Rules and cheque for payment of premium

• Open a bank account in favour of the Trust.

Risks Borne By The Policyholder





under the policy are also subject to the Tax Laws and other financial enactments as they exist

from time to time.

33


Number of schemes & the sum assured by LIC

Year No. of Schemes Sum Assured/Annuity Per Annum

Group Insurance (incl.Social

Security)

2008-2009

2007-2008

2006-2007

20,771

22,113

20,434

75,256.56

67,784.93

1,52,864.62

Group Superannuation

2008-2009

2007-2008

2006-2007

540

445

263

347.52

279.04

212.09

Linked Business G Plus*

2008-2009 24 62.21

34


2007-2008

2006-2007

46

20

138.38

97.68

*Scheme introduced during 2006-07

Number of schemes offered by LIC for the period of 2006-2009

The Sum assured/ annuity per annum for the period of 2006-2009

35


Social Security Schemes

JanaShree Bima Yojana (JBY)

Features

The objective of the scheme is to provide life insurance protection to the rural and urban poor

persons below poverty line and marginally above the poverty line.

Eligibility:

A person who is

*Aged between 18 and 59 years.

*Below or marginally above poverty line

*A member of any of the approved vocation/occupation groups

Nodal Agency:

A State Government Department which is concerned with the welfare of any such

vocation/occupation group, a Welfare Fund/ Society, Village Panchayat,NGO,Self-Help

Group,etc.

Minimum Membership Size:

Twenty Five.

Benefit enhanced w.e.f. 15.08.2006

In the events of

*Death (other than by accident) of the member, an amount of Rs.30,000/- is payable.

*death/total permanent disability, due to accident, an amount of Rs.75,000/-is payable.

*Permanent partial disability, due to accident, an amount of Rs.37,500/- is payable.

Premium :

*The premium under the scheme is Rs.200/-per annum per member. *50% of the

36


premium i.e. Rs.100/- will be contributed by the member and/or Nodal Agency/State

Government.

*Balance 50% will be borne by the Social Security Fund.

Approved Vocation & Occupational Groups:

A) The group that can be covered are like workers in -

(i) Foodstuffs like khandsari

(ii) Textile

(iii) Manufacture of wood products

(iv) Manufacture of paper products

(v) Manufacture of leather products

(vi) Printing

(vii) Rubber and coal products

(viii) Chemical products like candle manufacture

(ix) Mineral products like earthern toys manufacture

(x) Fire cracker's workers

(xi)Construction workers

(xii)Other related cottage industries to be identified by Nodal

Agencies and other groups as identified by the Nodal Agency and approved by LIC.

B) The occupational groups are :

Beedi workers, Brick Kiln Workers(Jalandhar),Carpenters, Cobblers, Fisherman, Hamals,

Handicraft Artisans, Handloom Weavers, Handloom and Khadi Weavers, Lady Tailors, Leather

and Tannery Workers, Papad Workers attached to 'SEWA', Physically Handicapped self-

Employed Persons, Primary Milk Producers, Rickshaw Pullers/ Auto Drivers, Safai

Karmacharis, Salt Growers, Tendu Leaf Collectors, Scheme for the Urban Poor, Forest Workers,

Sericulture, Toddy Tappers, Powerloom Workers, Scheme for Women in Remote Rural Hilly

Areas.

37


Shiksha Sahayog Yojana

This is a scholarship scheme launched on 31.12.2001 for the benefit of children of members of

Janashree Bima Yojana.

Eligibility:

Students studying in ix to xii standards, whose parents are covered under Janashree Bima

Yojana.If a student fails and is detained in the same standard, he will not be eligible for

scholarship for the next year in the same standard.

Benefit:

Scholarship of Rs 300/- per quarter per child will be paid for maximum period of 4 years.

The benefit is restricted to two children per member(family) only.

Premium:

No premium is charged for the scholarship

How To Claim Scholarship:

The Nodal Agency will identify the students. The member of Janashree Bima Yojana

whose child is eligible for scholarship has to fill up an application form (available with

Nodal Agency) and submit to the Nodal Agency. The applications duly filled up and

certified will be sent along with the list of the beneficiary students by the Nodal Agency

to the concerned LIC, P&GS Unit for disbursement of scholarship/s.The scholarship/s

will be disbursed to the beneficiary students through the concerned Nodal Agency.

As only a limited number of beneficiaries will be provided scholarship under the scheme, 38

http://www.licindia.in/social_securities_003.htm


the selection for eligible students will be made on the basis of poorest of the poor.

The scheme will be administered through Pension and Group Schemes Department of

LIC of India.

Aam Admi Bima Yojana

Features

In a rural landless household, when everyday living is a struggle, it is difficult to face life with a

smile. And it becomes even more difficult when the future of your family is uncertain.

AAM ADMI BIMA YOJANA, a prestigious scheme of the Central and State / Union Territory

Governments and administered by LIC brings a ray of hope and smile to these households.

Nodal Agency

The Nodal Agency shall mean the State / Union Territory Government appointed to

administer the scheme.

The Nodal Agency shall act for and on behalf of the insured members in all matters

relating to the Scheme.

Identification Of Beneficiaries

The State / Union Territory Government in consultation with the Panchayats will identify

the persons to be covered under the scheme. All the members will be provided with an

identity card by LIC with an unique identity number.

Eligibility

The member should be aged between 18 and 59 years

39

http://www.licindia.in/aam_admi_features.htm


The member should be the head of the family or one earning member in the family of

rural landless household.

Age Proof

Ration Card

Extract from Birth Certificate

Extract from School Certificate.

Voters list

Identity Card

In case of doubt, a certificate from Primary Health Centre can be accepted as authentic proof of

age.

Benefits

In the event of death of a member prior to the terminal date, the Sum Assured of Rs.30,000/-

will become payable to the nominee.

Accident Benefit: In the event of death by accident or Total / Partial Permanent Disability due to

accident, the following benefits shall become payable:

a) on death due to accident Rs.75,000/-

b) Permanent total disability due to accident Rs.75,000/-

c) Loss of one eye or one limb in an accident Rs.37,500/-

A free add-on scholarship benefit for the children of the members of AABY is provided under

the scheme. A scholarship at the rate of Rs. 100/- per month will be given to maximum two

40


children studying between 9th to I2th Standard. This scholarship, however, is payable half yearly

- on 1st July and on Ist January, each year.

Premium

The premium under the scheme shall be Rs.200/- out of which 50% shall be subsidized

from the Fund created for this purpose by the Central Government and the remaining

50% shall be contributed by the State Government.

The premium shall be payable in yearly mode and no relaxation of mode of payment will

be allowed.

Experience rating adjustment will be allowed after 3 years based on claim experience, if

the group is of 2,000 or more members. Even if the group size is small and the claim

experience is adverse, LIC may review the rates.

Claim Procedure

Claim procedure is simple. The beneficiary will be required to furnish the original death

certificate and the identity card issued by LIC to the Nodal Agency who will arrange to

forward the same along with the claim form to the nearest P&GS Unit in the cities where

P&GS Units are located. In the cities where the P&GS Units are not located, the claim

should be submitted to the nearest branch office of LIC. LIC will settle the claim by

sending Account Payee cheque directly to the beneficiary or by any other mode of

payment as decided by LIC. In case of death by accident, police inquest report, FIR, post

mortem report will also be required to be submitted.

41


In case of disability claim, documentary evidence of the accident as well as medical certificate

from a Government Civil Surgeon or qualified Government Orthopaedician certifying permanent

total / partial disability should be submitted.

Death/total permanent disability due to accident shall mean death / disability occurring within

I80 days of the happening of bodily injury resulting solely and directly from accident caused by

violent, external and visible means, independently of any other cause.

Procedure To Claim The Scholarship

The Nodal Agency will identify the students. The member whose child is eligible for

scholarship shall fill up an application form and submit it to the Nodal Agency. The

Nodal Agency in turn will submit the list of beneficiary students to the concerned P&GS

Unit with full details such as name of the student, name of the school, class, member’s

name, master policy number and membership number.

Every half year, LIC will send the Account Payee Cheque in the name of the Nodal

Agency along with list of beneficiary students. The Nodal Agency will pass on the

scholarship to the eligible students. The Nodal Agency shall submit a utilization

certificate before claiming the scholarships for the next half year.

Any other mode of payment of scholarship may be decided by LIC/Government.

42


References

WWW.LICINDIA.IN

WWW.IRDAINDIA.ORG

WWW.GOOGLE.COM

43

http://WWW.GOOGLE.COM/

http://WWW.IRDAINDIA.ORG/

http://WWW.LICINDIA.IN/

Documents

Group LIC Scheme